The FSA has banned two insurance brokers for underinsuring clients and offering free life cover without informing providers.
Andrew Porter was the only broker at Porter Insurance which specialised in providing policies for businesses and individuals.
The FSA found that Porter had deliberately underinsured clients and retained the surplus money for his benefit. He also misled companies into paying for unsuitable cover, and falsified documents to mislead client firms and insurers.
In a separate case, the FSA has also banned Alexander Brincat, and withdrawn the permissions of his firm Wise Owl Services.
Brincat was the sole director of Wise Owl, which specialised in life cover and buildings insurance.
The regulator found that between September 2009 and August 2010 Brincat failed to disclose to providers about the company’s strategy to provide free life cover to customers, and failed to monitor the high cancellation of policies sold by the firm.
Brincat also left the country for prolonged periods without putting in adequate compliance arrangements. He also did not ensure Wise Owl had sufficient resources to pay premiums for customers who had agreed to free life cover, and failed to pay clawback commission when cover was cancelled.
He also failed to monitor Wise Owl’s financial position and its liabilities to insurers.
FSA acting director of enforcement and financial crime Tracey McDermott says: “Andrew Porter deliberately underinsured clients, many of whom were involved in high risk trades. He provided them with policies he knew were potentially worthless and would not payout if they suffered an accident. This is not only a dishonest and deliberate failing in his responsibility as an approved person, but a complete breach of trust with his clients.”
She added: “Alexander Brincat’s incompetence at Wise Owl posed a risk to other market participants and to confidence in the financial system. In order to remove this risk Brincat has been banned. We will continue to take action against individuals who, either through incompetence or fraudulent activity, allow their firms to cause such losses to other market participants.”