FCA bans and fines fraudulent broker who poses a ‘serious risk’ to customers

A broker at Colchester-based Eley Insurance Services Ltd has been banned and fined £7,200 by the FCA for producing fraudulent client documents.

Eley falsified 10 no claims discount letters in relation to 10 customer policies and sent the paperwork to an insurer.

The FCA said Eley, who was a director at the time, posed a “serious risk to customers and to confidence in the financial system”.

He escaped a higher fine of £10,286 because he settled early, qualifying for a 30% discount under the FCA’s executive settlement scheme.

Eley carried out the scam between October 2012 and November 2012, netting £34,287 income through the fraud.

The FCA said: “Philip Eley, while acting in his capacity as a director of EISL, failed to act with integrity. He poses a serious risk to consumers and to confidence in the financial system.

“The authority has concluded that Philip Eley fails to meet the criteria for fitness and propriety and that Philip Eley is not fit and proper to be an approved person.”

Insurer suspected falsified paperwork

An FCA notice said the scam began on 12 October 2012 when an insurance company wrote to EISL requesting copies of 30 of its customers’ files to be reviewed as part of a periodic audit – to check that correct premiums were being collected from clients for their level of risk.

After the audit, conducted between 5 November 2012 and 6 December 2012, the insurer suspected that 10 of the NCD letters had been falsified.

Six purported to come from two other insurers confirming the no claims history of the relevant customers. But after sending the documents to the other two insurers for verification, they confirmed the letters were fraudulent.

During a voluntary interview on 8 July 2013, Eley admitted he had falsified all 10 NCD letters and had sent them to the insurer in an attempt to cover a gap in the no claims discount bonus audit trail so that EISL would not fail the audit.

EISL had a contractual obligation with the first insurer to obtain proof of no claims history from each client within 21 days of commencement of the insurance policy.

He was preparing the 30 customer files requested by the insurer when he realised that the NCD letters were missing from 10 of the customer files.

Panicking, he falsified the missing 10 NCD letters by taking a piece of paper marked with the letterhead of the other two insurers, placing a piece of paper over the top and manually typing in false information relating to the clients’ previous insurance policies.

Eley hoped the first insurer would accept the letters as genuine proof of the clients’ no claims history.  

The FCA said Eley had no way of knowing what each client’s true NCD position was. This meant that the policies could have been cancelled by the insurer, leaving the customers without valid cover for that period.