Broker boss admits to ‘no idea’ about Goodwin Best fraud

BLS Insurance director Brian McGlaulin has told Insurance Times he had no idea that Goodwin Best directors had embezzled client premiums when BLS acquired the broker’s book in 2010.

Former Goodwin Best partner Stephen Goodwin was today fined almost £500,000 and banned by the FSA after it emerged that he and his partner had misappropriated £303,846 worth of premiums, causing financial loss to at least three clients.

BLS, which only began trading in June 2010 and is a member of the Purple Partnership network, bought the goodwill of rival Bury-based broker Goodwin Best in November of the same year.

“I had known Steve for a number of years on and off, and that it was a reasonable sized business,” McGlaulin said.

“But obviously the wheels had come off before we were aware of it. Fortunately we had just acquired the goodwill rather than the assets and liabilities, so we weren’t too bad off at the end of the day. “

Between 2008 and 2010, Goodwin and his (now deceased) business partner received premiums from clients that they sometimes paid into their business account rather than to the relevant insurer or broker.

“Had we known that, we would have never done the deal,” said McGlaulin.

Meanwhile, AutoRek director Jim Muir said in reaction to the fine: “It’s always disappointing to learn of any fraudulent misappropriation by a trusted financial representative. One would have expected checks and balances to exist in the systems to detect such longstanding naughtiness!

“Automated client money reconciliations and calculations are now so auditable that the regulators and auditors can very quickly spot any problems. In any collusive fraud, especially among owners and directors of the business, external checks and balances should be able to be relied upon. One would think that the ‘not taken up’ quotes [issued but not converting to policies] might have set alarm bells ringing at insurers too.”

For more, read today’s briefing: More facts emerge over fined Bury broker