The FSA has fined Richard Holmes, a director of insurance broker AIF Limited, the sum of £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.
In February 2007, an insurance underwriter advised Holmes that the AR had premiums outstanding but he relied on assurances from the AR that the premiums had been brought up to date rather than checking further.
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.
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.
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 took into account that Holmes did not deliberately set out to contravene its requirements and that he 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 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, says that senior management at firms must ensure that their appointed representatives are appropriately overseen.
He adds: “As a director of the firm, Richard Holmes failed to carry out sufficient initial checks and then failed to monitor adequately the activities of the AR over a period of almost a year despite identifying a number of concerns early on during the AR agreement – this falls below the standards that FSA expects of firms.”
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