FSA hits fraudulent broker with £195,000 fine and ban

The FSA has banned and fined a life and general insurance broker who swindled £125,117 out of insurers by faking policy documents.

The regulator said the penalty handed to John Folan included a £70,000 fine and the recovery of the £125,117 he obtained through commission.

Folan went to great lengths to hide his deceit, destroying policy documents as soon as he received them so that there was no trail for suspicious insurers to pick up.

Folan, director and adviser at Key Mortgage Associates, fraud began in January 2008 with the aim of pulling in more money earned in broker commissions than actually paying out on the life and protection premiums.

Folan, based in Brentwood, Essex, submitted at least 54 applications for life assurance and protection policies in his name, his wife’s name and in the name of family members up until September 2009.

He made the applications without their knowledge and in three cases falsified signatures.

In each case Folan provided his own bank account details so that direct debit payments could be taken by the insurance providers.

Folan aimed to keep up with the premiums, but when his money began to run out he took out further policies to secure more commission to cover the outstanding payments.

Before long however this process of ‘churning’ made the providers suspicious and they contacted the FSA.

Folan used his own address as the point of correspondence to conceal his tricks from the people he was impersonating.

When documentation was occasionally sent to family members he lied to them to conceal his true intent by saying he was submitting ‘sample policies’.

Folan destroyed policy documents as soon as he received them so that he kept no audit trail of his wrongdoing.

Tom Spender, head of retail enforcement at the FSA, said: “This is a significant fine to reflect significant failings. Folan took advantage of his position as an FSA approved individual for his own personal gain, and at the same time took advantage of his close family. The FSA concluded that he lacks honesty and integrity.

“Folan’s actions tarnish the industry’s reputation, and that is why we continue to pursue these cases and publish the findings. Anybody working in the industry who is tempted to commit any type of insurance fraud should note the consequences of their actions.”