The Financial Services Authority (FSA) has today banned two insurance brokers for misconduct including falsifying documents and underinsuring clients for their own financial gain.
Andrew Porter and Alexander Brincat have been banned from working in the financial services industry.
The FSA has also withdrawn the permissions of Brincat's insurance firm Wise Owl Services Limited (Wise Owl).
Porter, the sole shareholder and the only broker at Porter Insurance, had deliberately underinsured clients, retaining the surplus money for his benefit, the FSA said.
He also exposed companies to the risk of significant financial loss by misleading them into paying for cover, which, unknown to them, was neither suitable nor appropriate for their business needs, leading them to be underinsured.
Porter also falsified documentation in the names of companies to mislead those clients and recipient insurance companies.
Porter's serious breaches posed a risk both to consumers and to insurance companies, and to confidence in the financial system, the FSA said.
The FSA also found serious failings in the case of Brincat, the sole director and shareholder of Wise Owl which specialised in insurance policies for buildings and life insurance.
Between September 2009 and August 2010 Brincat failed to monitor adequately the high cancellation rate of life insurance policies sold by his firm, or to tell Wise Owl's insurance providers it had a sales strategy of offering free life cover to customers.
He also left the country for long periods without putting in place adequate compliance arrangements at Wise Owl.
This included failing to ensure the firm had sufficient resources to pay premiums due to customers who had agreed to the free life cover, and to repay commission claw back owed to insurance providers when such cover was cancelled.
The FSA also found Brincat had failed to monitor Wise Owl's financial position, including the extent of Wise Owl's liabilities to insurance providers.
Brincat's insurance providers suffered significant losses as a result, the FSA said.
Tracey McDermott, acting director of enforcement and financial crime, said: "Andrew Porter deliberately underinsured clients, many of whom were involved in high risk trades.
"He provided them with policies he knew were potentially worthless and would not payout if they suffered an accident."
"Alexander Brincat's incompetence at Wise Owl posed a risk to other market participants and to confidence in the financial system."
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