£200K fine for protection policy fraud
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The FSA has banned and fined a mortgage and insurance broker £195,117 after he submitted at least 54 applications for protection policies purely to obtain the commission.
Between January 2008 and September 2009, Key Mortgage Associates director John Folan submitted at least 54 protection applications in his own name and in the names of close family members across seven providers.
Folan was paid £125,117 in commission for 50 of the policies submitted. Providers have tried to claw back the commission but he has been unable to pay back any of the debt.
He used his own address for correspondence to ensure policy documentation was not sent to family members and he used his own bank account details for premiums. As a result of non-payment, policies either lapsed or were cancelled. Folan destroyed any paperwork in relation to the policies as soon as it was received from a provider. Where documents were sent to family members, Folan told them he was submitting sample policies to providers in their names.
In at least three cases, Folan falsified signatures of family members to complete paper applications. Other false applications were submitted online.
FSA head of retail enforcement Tom Spender says: “This is a significant fine to reflect significant failings. Folan took advantage of his position as an FSA-approved individual for his own personal gain and, at the same time, took advantage of his close family. The FSA concluded that he lacks honesty and integrity.”
Highclere Financial Services partner Alan Lakey says: “Something like this is bad news for the reputation of the protection industry and potentially puts more pressure on the FSA to decide that this particular stable needs clearing out. This is a shame as this behaviour is not reflective of the wider industry.”
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