Ghost Brokers – how to avoid unauthorised Insurance Brokers

We all know that buying a laptop from some bloke in a pub car park means there’s a fair chance it has a dodgy background. But did you know there’s an insurance equivalent? Ghost brokering means the sale of fraudulent motor insurance policies by advisors who are not legally permitted to practice.

The FCA has released a statement warning consumers over checking the authorisation status of their insurance broker. Halifax and Penn have been named as the latest broker who the regulator believes to have been “…providing financial services or products in the UK without our authorisation”

How can you spot a ghost broker, and what should you do if you suspect your policy is not bona fide

What is ghost brokering all about?

Ghost brokering occurs when invalid policies are sold to unwitting customers. The policies might be complete fakes, appearing to be from reputable insurers when in fact they have been created by a fraudster. Alternatively, ghost brokers sometimes buy policies from insurance companies under false pretences, and then doctor them prior to resale or cancel them for a refund.

The negative consequences of buying a fake insurance policy are hard to overstate. The insurance will almost certainly be invalid, meaning you will be committing a criminal offence because the law requires you to hold a policy. Driving without insurance is punishable by anything from a fixed penalty of £300 and six penalty points to an unlimited fine and disqualification from driving, in the most serious cases. Unfortunately, many people only discover their insurance is invalid when they are stopped by the police. By then, the offence has been committed.

Without valid insurance, you could also face any civil claim made against you being financially ruinous. Insurers regularly settle claims worth millions of pounds, often involving paying the legal costs of third parties in addition to damages. Paying this yourself could mean losing your house and assets or falling into bankruptcy.

How can you spot a ghost broker?

The crudest of ghost brokers are as easy to spot as someone selling a dodgy laptop: if someone offers insurance in a pub or bar, in a newsagent small ad, or on a social networking site then there is a tiny likelihood that it will provide you with valid cover, so you should run a mile. Motor repair shops are another place where ads for dubious policies often appear.

More sophisticated criminals are harder to spot. Criminals are effective at mimicking real insurance brokers, offering convincing paperwork and even offering payment by instalment or credit card.

You can check if your motor insurance policy is valid by searching for it on the Motor Insurance Database run by the Motor Insurers’ Bureau (MIB). Even if your policy is listed, double checking with the insurer is a good idea to make sure you have valid cover.

What should you do if you have been sold fraudulent insurance?

If you suspect that you have been offered or sold fraudulent motor insurance, you should report this to the Insurance Fraud Bureau (IFB) Cheatline by calling 0800 422 0421 or completing a form on the IFB website. Alternatively, you can visit the FCA website at