On 15 April 2014, the FCA published two warning notice statements in relation to unnamed directors of an insurance broker. They are the first warning notice statements not related to interest rate benchmark submissions since the power to publish went live in October last year.

The statements serve as a further reminder to senior management in the insurance industry that (i) the FCA is looking to hold individuals to account; and (ii) in terms of corporate governance, directors cannot rely on unchallenged verbal assurances from others.

The statements indicate that, at this early stage of the proceedings and pending a final determination, the FCA considers that these directors may have breached the FCA’s Statements of Principle and Code of Practice for Approved Persons.

The statement relating to a former Chief Executive refers to breaches of Statement of Principle 2 (Skill, care and diligence) and Statement of Principle 7 (Communications with clients) as a result of the following conduct, over a period of more than one year:

• creating and using inaccurate client money calculations;
• causing the firm to fail to handle client money in accordance with the relevant regulatory rules and requirements by: i) causing the firm to apply premiums, given by customers to arrange insurance policies, for its own business costs; and ii) failing to use available information to ensure that the firm only transferred monies from its client premium accounts which were properly due to the firm in commission earned; and
• failing to take necessary steps to understand the requirements of the regulatory system and the responsibilities associated with the individual’s significant influence functions.

The statement relating to the other director refers to breaches of Statement of Principle 6 (Customers’ interests) and Statement of Principle 7 (Communications with clients) as a result of the following conduct, over a period of more than one year:

• failing to take adequate steps to remain informed about the firm’s business and finances;
• relying solely on verbal assurances about the state of the firm and failing to challenge these; and
• paying insurance premiums of another entity into a client premium bank account of the firm and receiving personal payments from such account.

View Warning notice statement 14/8 – individual, 15 April 2014

View Warning notice statement 14/9 – individual, 15 April 2014