Walsall Bridge Insurance has been stripped of its permission to carry out regulated activity by the FSA after it emerged that its director had failed to handle client money correctly.
The FSA has also stripped the broker's sole director, Geoffrey Robbins, of his authorisation after finding him "not fit and proper" to work.
The regulator said the broker was guilty of charging inflated premiums to six clients. He had also failed to pass over premiums to insurers, leaving 19 clients without cover and one suffering losses.
Robbins admitted he had misled clients over their policies, and also confessed that he had obtained loans to cover the cost of premiums, but had failed to use the loans for that purpose.
After being stripped of its authorisation Walsall was left owing insurers premiums worth in excess of £140,000.
The FSA said the charges were "particularly serious" as the broker had not informed it of any financial difficulties it had uncovered prior to the regulator's visit.
' The FSA this week fined Regency Mortgage Corporation £56,000 for failures relating to the sale of mortgage payment protection insurance (PPI). It is the first time the FSA has taken action against a firm for sales of PPI.
The FSA said Regency did not treat its customers fairly and failed to organise and control its business effectively.
