The decision will bring a sigh of relief to the £60bn sector - which comprises Lloyd's of London as well as brokers such as Aon, Willis Towers Watson and Marsh – as it has escaped tough new rules or a referral to the UK competition authority for further investigation.
"We suspect that a lot of brokers will be surprised by the clean bill of health given by the FCA and its decision to close its market study," said John Needham, a partner at PKF Littlejohn. "Many brokers expected the review to result in the regulator intervening in what they perceive is an unbalanced market."
The Financial Conduct Authority (FCA) launched the inquiry in November 2017 to look at whether any brokers possess too much market power, if there are any conflicts of interest and how certain tactics could damage competition.
The FCA said at the time that it was concerned by the rise in services the market was offering. Brokers typically act as middlemen by placing their clients with underwriters willing to take on the risk, but since the financial crisis they have looked to offset declining premiums by trying to make money in new areas.
However the regulator said on Wednesday that it had "not found evidence of significant levels of harm that merit the introduction of intrusive remedies".
It said despite this it did find areas that could be improved, including the way conflicts of interest are managed and how information is disclosed to clients. Christopher Woolard, the FCA's executive director of competition, said the watchdog would work with brokers to address some of these concerns.