The FSA has closed down Manchester broker M Young Legal Associates for leaving clients uninsured by selling them insurance without underwriting in place.
The regulator has banned managing director Michael Young, also known as Mohammad Younas Yousaf, and financial director Asif Habib Malik for their roles in the affair.
The firm advised on and sold after-the-event legal expenses insurance policies that cover customers’ legal costs if a claim is unsuccessful.
FSA investigations found that between July 2003 to March 2004 and September 2004 to November 2005, MYLA issued insurance policies in the names of National Insurance and Guarantee Corporation, IGI Insurance Company and Contractors Bonding despite having no underwriting agreement in place. It says the firm failed to pass on premiums to underwriters when it did have underwriting cover, failed to adequately protect client assets and charged clients interest on credit agreements for premiums that were never paid.
FSA head of retail enforcement Jonathan Phelan says: “M Young Legal Associates exposed its customers to significant risks and potential hardship by claiming to have insurance underwriting agreements in place when it did not. Firms should not take clients’ premiums and then fail to arrange insurance.
“We have banned Mr Young and Mr Malik and closed M Young Legal Associates to protect consumers and the reputation of the insurance industry. This action is one of the toughest sanctions that we can take and reflects the seriousness of the behaviour.”