The FSA has closed down a Manchester insurance broker after the firm sold insurance with no underwriting in place, leaving clients uninsured.
The regulator says M. Young Legal Associates (MYLA) advised on and sold after-the-event legal expenses insurance policies, which cover the customers' legal costs if their claim becomes unsuccessful.
It says it has banned the company’s managing director, Michael Young - also known as Mohammad Younas Yousaf - and Asif Habib Malik, the financial director.
The FSA found MYLA issued policies in the names of National Insurance and Guarantee Corporation, IGI Insurance Company and Contractors Bonding between July 2003 to March 2004 and September 2004 to November 2005, despite putting no underwriting agreement in place.
MYLA also failed to pass on premiums to underwriters when it did have underwriting cover, to adequately protect client assets, and charged clients interest on credit agreements for premiums they never paid.
The FSA says Young failed to act with honesty and integrity, and he misled insurers, customers and the regulator.
It says Malik's conduct demonstrated a serious lack of competence and capability and a lack of integrity in his dealings with the FSA. Malik left the firm in March 2006.
Jonathan Phelan, head of retail enforcement at the FSA, 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 both consumers and the reputation of the insurance industry.
"This action is one of the toughest sanctions we can take and reflects the seriousness of the behaviour."
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