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FSA fines and bans insurance brokers for fraud

The FSA has fined two insurance brokers a total of £200,000 for insurance fraud and banned five individuals for failings related to insurance fraud.

Jeffery Flanders Consulting director Andrew Jeffery has been fined £150,000 and banned for insurance fraud.

The FSA says Jeffery recklessly failed to put in place insurance policies despite collecting payment from customers.

In so doing, he exposed customers to risks such as not having adequate household or motor insurance. This was particularly serious as many of the customers were elderly or vulnerable. He also knowingly forged documentation and correspondence potentially to mislead insurance companies.

Jeffery obstructed the FSA’s investigation by failing to report changes to the firm’s contact details, as well as not providing documents or attending meetings at the request of the FSA.

Barrie Duncan Aspden of Orion Direct Limited was banned from performing any regulated role in financial services for knowingly using approximately £300,000 of Orion client money to finance the creation of a new online motor insurance site Click the Pepper, which traded as Peppercom.

Having been made bankrupt and unable to obtain approved person status, Aspden put in place three directors at Orion and Peppercom including two relatives and a family friend. All three directors lacked the competence and skills to perform their roles.

Aspden’s wife, Melanie Aspden, and his sister-in-law, Gaenor Clayton, have been banned for their failure to demonstrate competence and capability as directors at Orion and Peppercom.

They were not involved in decision-making or financial management but instead delegated these responsibilities to Barrie Aspden, who was not an approved person.

They both failed to ensure client funds were used solely for the purposes they were provided for.

Both Melanie Aspden and Clayton admitted to not having the necessary experience for the director role. The FSA says they would have each been fined £35,000 had they not demonstrated financial hardship.

Paul Willment of Orion and Peppercom has been fined £50,000 and banned from financial services, also for his failure to demonstrate competence and capability. The fine reflects the seriousness of Willment’s misconduct as director and non-executive director of Orion and Peppercom.

The FSA says Willment rarely attended Orion’s offices, had no active involvement in the management of the business and delegated his roles and duties to Barrie Aspden.

FSA director of enforcement and financial crime Margaret Cole says: “These five individuals acted with complete disregard for the interests of their customers and the FSA’s regulatory requirements.

“Individuals holding a significant influence function role such as that of director must act with integrity as well as with the skill, care and diligence necessary to manage effectively the businesses for which they are responsible.

“The FSA does not tolerate these types of failings. We will continue to take action against those who commit insurance fraud, as well as those who fail to take action to prevent it.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Sounds like a fair cop though, as always, it would be interesting to know how long these activities were going on before the FSA became aware of them.

    I appreciate that no regulator can undertake a compliance visit to every firm every year, though one wonders whether or not any customers tried to complain to anybody other than the firm itself about how they’d been ripped off and, from that event, how long it took for anything to happen on the regulatory front. Just a thought.

  2. Can I assume that somebody will go to jail over this. It is about time the industry stood up and said enough. Appreciate the FSA don’t have those powers, but they should be working with those that do.

  3. its nice to see the FSA actually doing what they are supposed to!

  4. I would love to see the FSA definition of financial hardship.

    And I agree with Mr Angry – surely this is fraud which should be dealt with by the courts.

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