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Adviser banned and fined £335k for retaining premiums

The FSA has banned and fined an adviser £335,204 after he deliberately retained premium payments which should have been paid to insurers.

Donald Morgan Insurance Services partner Donald Morgan should have paid the premiums via his network. The FSA does not name the network involved.

The FSA says clients’ premium payments were misappropriated between 2005 and 2010. The regulator found that Morgan deliberately manipulated DMIS’ computer systems and falsified monthly reports to hide what he was doing from the network.

It says although clients did not suffer, the network suffered financial loss as a direct result of Morgan’s actions.

Morgan and his wife Janet, also a partner at DMIS, have been banned from carrying out regulated activities.

The FSA says Mrs Morgan failed to take reasonable steps to inform herself about the affairs of DMIS, and failed to satisfy herself that the business was meeting regulatory rules.

The regulator says: “The FSA considers Mr Morgan’s conduct to be extremely serious because it demonstrates a lack of honesty and integrity. Mr Morgan abused the trust and confidence placed in him by clients and other firms.

“The action against Mr Morgan supports the FSA’s statutory objectives to reduce financial crime, maintain market confidence and protect consumers.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Should he not be jailed? It’s about time the deterrent for what has been described as “extremely serious and a lack of honesty and integrity” attracted more than just a fine, substantial though it is. Mind you, the justice system in general is rubbish in this country. Bring back hanging!

  2. ‘To hide what he was doing from the network’ – the approved person for the network should be sacked – clearly their monitoring was indequate to enable this to go on for so long and to such an extent – did they never cross check diary appointments, fact-finds, applications etc etc? Shameful.

  3. Anon 11.57. How can you possibly cross check in the way you describe, and what would it solve? This adviser was a bad apple, how he did it, I don’t know, but where money is involved this will always happen.

  4. The report uses the term ‘Adviser’, a title thrust upon us by the FSA, and I imagine that anon is assuming that means a ‘Financial Adviser’, whereas it would appear that Mr Morgan was an Insurance Broker, collecting Premiums and issuing cover notes, but retaining the premiums which of course, unlike IFA business, are payable to the Broker.

    I think the first recorded instance of this practice was somewhere around 1850, (OK I made that up) and ad nauseum up until authorisation for Brokers a few years ago, a matter for the Insurance Company to sort out and to pursue thriugh litigation if they thought it worthwhile.

    It was also of course the job of the Insurance Co ‘Inspector’ to monitor business and to prevent such activities.

    But that was another time, in another world, and quite possibly on another planet.

  5. Gerry Cooper’s comment that this “Adviser” worked in general insurance is a welcome addition to the information contained in the report, not least because it highlights that amazing double standards of the FSA. They require that Advisers treat clients fairly by being clear in their explanations, whilst not being so themselves. They have created a range of “Adviser” types but rarely use the distinctions when reporting facts. Presumably they believe that painting everything in one colour brings confidence to the market!
    Secondly, why has this person not gone to jail? Retaining premiums is surely a polite way of saying he stole from clients. Precisely what standards are the FSA applying in their investigations? A lack of consistency does not encourage trust and respect, which are already scarce commodities for the FSA.

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