Matthew Sixsmith was the director of Manchester-based Bridgewater House UK, which dealt mainly in the sub prime mortgage market, but also arranged life and critical illness insurance in connection with those mortgages.
When Bridgewater sold an insurance policy, it would charge its customers two years’ insurance premiums upfront and then add this amount to the mortgage.
The firm agreed with its customers that it would hold this money and then pay the insurance premiums to insurers on their behalf.
However, Sixsmith failed to separate his customers’ money from that of the firm and used only one bank account under the name of Bridgewater to administer both his business and the premium payments customers had entrusted to him.
As a result, when Sixsmith’s firm ceased trading in September last year, approximately £85,000 of customers’ money was lost.
The FSA says as Bridgewater’s sole director, it was also Sixsmith’s responsibility to ensure that any insurance premiums that customers had lodged with the firm were passed on to the insurers when payments became due.
However, approximately 700 policies lapsed because, until May 2008, Sixsmith kept no record of when these payments should begin or end for each of the firm’s customers and therefore he failed to ensure that premiums were paid when due.
The FSA says it would have imposed a penalty of £25,000, but this would have placed Sixsmith in serious financial hardship.
FSA director of enforcement Margaret Cole says: “Sixsmith was incompetent and his actions posed serious risks to customers who trusted him with their money and expected him to pass that money on to insurers.
“Individuals who look after client money must act in accordance with the rules. Where they fail to comply, we will not hesitate to take enforcement action against them.”