The FSA has fined Richard Holmes, a director of insurance broker AIF Limited, £20,020 for control failings in relation to an appointed representative firm (AR).
In September 2006, Holmes appointed an AR without carrying out the necessary checks, using only assurances from two business contacts. These individuals were subsequently banned by the FSA on 2 November 2006.
The following February, an insurance underwriter advised Holmes that the AR had premiums outstanding and rather than checking further, he relied on assurances from the AR that the premiums had been brought up to date. Again, when the AR appeared to have problems paying insurance premiums promptly to AIF, Holmes failed to increase his monitoring in any way and nor did he investigate the way the AR was carrying out its business.
Finally, following a complaint made by a client of the AR in September 2007, regarding its failure to put insurance in place, Holmes terminated the AR’s status.
Holmes subsequently became aware that the AR had received clients’ premiums but failed to pass them on to the underwriter, leaving the clients uninsured. In addition, the AR had also instructed AIF to arrange insurance policies on behalf of clients but had failed to pass on the client premiums to AIF.
The FSA is satisfied that Holmes then ensured that AIF took steps to arrange alternative insurance for the clients who had been left uninsured and also ensured that cover was maintained where AIF had already provided instructions to the insurer. The cost to AIF of ensuring clients remained on cover was approximately £27,000.
The FSA took into account that Holmes did not deliberately set out to contravene its requirements co-operated with the FSA and took remedial action to ensure clients were not left uninsured.
Holmes agreed to settle at an early stage of the FSA’s inquires and therefore qualified for a 30% discount under the FSA’s executive settlement procedures. Without the discount the fine would have been £28,600.
Jonathan Phelan, head of retail enforcement, said: “Senior management at firms are responsible for the standards and conduct of the businesses they run – this applies to all firms both large and small. In particular