The FSA has revoked Travel broker Xsavi's permission to trade...
The FSA has revoked travel broker Xsavi's permission to trade.
The FSA said it took action as Xsavi had failed "to conduct its business in compliance with proper standards and {had] inadequate financial resources."
In February 2005, Xsavi claimed to be acting as agent for an insurer with authority to bind the insurer when it did not.
As a result, the FSA said 2,000 customers were issued with a travel insurance contract when there was no insurance in place.
A further number of customers were potentially put at risk of not having effective travel insurance in the period March to August 2005, as Xsavi exceeded its authority in respect of its agency agreements with two other insurers.
The FSA said Xsavi failed to comply with four of the FSA's principles for businesses in relation to: integrity; skill care and diligence; management and control, and customers' interests.
Andrew Honey, head of insurance in the FSA's small firms division, said: "We will take action against firms that fail to comply with our rules."
The FSA said the situation was made worse as Xsavi misrepresented to its market counterparties that it had underwriting in place knowing that on this basis the counterparties would obtain business from travel industry firms and sell travel insurance policies to customers.
The regulator said it accepted that Xsavi was in genuine negotiations via an agent with an insurer to provide underwriting, Xsavi's managing director Ian Allan 'jumped the gun' in facilitating the sale of the policies through brokers at a time when there was no agency agreement in place.
When it became clear that the business arrangement with the underlying insurer was not going to proceed, Allan reported the matter to the FSA. No consumers were disadvantaged as retrospective cover was put in place, the FSA said.
Allan notified the FSA on 15 September 2005 that Xsavi was insolvent. As a consequence of its insolvency the firm had inadequate financial resources in breach of rules for authorisiation.
