Director banned for ignoring concerns over £2m fraud

A director has been fined and banned by the FSA after ignoring “serious concerns” about a scheme that led to a £2m fraud being committed against QBE and Markel.

Barry Williams, a director of Surety Guarantee Consultants (SGC), has been fined £25,000 and banned from working in regulated financial services.

The regulator said that although he was not a participant in the fraud, as a director of SGC, Williams “turned a blind eye” by deliberately ignoring his responsibilities as an approved person.

FSA director of enforcement and financial crime Margaret Cole said: “In believing that he could be a ‘sleeping director’ without incurring any responsibility, Williams did not take his accountability as an approved person seriously. He recklessly abused the trust and confidence placed in him by leading London market insurers and, by doing so, enabled secret profits to be made from the fraud by his colleagues.”

In July last year, Insurance Times reported that the FSA had banned three insurance professionals, including two SGC employees, involved in the same fraud.

SGC was established in 2004 to issue surety bonds, and held binding authorities with Markel and QBE via its agent Amalfi between January 2005 and August 2006.

The FSA said it wrote business that exceeded its authorised limits, exposing Markel and QBE to greater liabilities than they had agreed.

In doing so, SGC made secret profits and withheld over £2m that should have been paid to the insurers.

When SGC was audited by the insurers, it produced false documents intended to show that it had kept within the terms of the binding authorities.

Timothy Higgins, Clifford Felstead and Ralph Brunswick were found by the High Court to have conspired to defraud Markel and QBE/Amalfi Underwriting in June 2008.

Law firm Eversheds associate Fiona Paddon said the action against Williams was part of a growing branch of FSA enforcement policy, in that directors must also show “competence”. In past investigations, the focus of enforcement policy had been more on whether the individual demonstrated “integrity”.

Paddon said: “We should expect more of the same over the coming year.”