Crackdown sends signal that small firms are on the ‘regulatory radar’
?The FSA this week continued its crackdown on rogue intermediaries, banning the director of a small Herefordshire IFA for improper use of client money.
Nigel Layton of Powell Price, which primarily conducted insurance business, had failed to pass on client premiums to insurers, leaving at least 16 clients uninsured.
He had used the money to run the day-to-day activities of the business over a period of at least 12 months from December 2005 when the business was deteriorating.
The enforcement action came as the FSA attempted to dispel the “misconception” that small firms were not on the regulatory radar.
Recent months have seen the FSA take action against a string of errant brokers. Last month, a director of Swindon-based insurance broker Chapel Finance was banned for failing to ensure that 225 insurance policies were underwritten.
And last November, the regulator banned a trio of directors, including two directors of ICM Group who had their permissions withdrawn for failing to pass clients’ premiums to insurers, using the money to run the business.
The FSA has stressed that it is prepared to take tough action against those who deliberately flout its client money rules.
Jonathan Phelan, head of retail enforcement at the FSA, said: “Firms must not use their clients’ money for their own purposes. The FSA will deal robustly with firms and individuals that misuse client money.
“Deliberate and knowing rule breaches of the kind committed by Mr Layton can lead to the individual being banned from the regulated financial services industry which is the most serious sanction we can impose.”
Meanwhile, the FSA has warned small retail firms that they were still on the “regulatory radar”.
Stephen Bland, director of small firms at the FSA, said that a misconception that small retail firms could escape the FSA’s attention was wrong and risked tarnishing the industry.
Bland said: “We are sending a very clear message that small retail firms are not under the radar.
“Our regulatory approach is based on giving help to firms who run their businesses while treating customers fairly and endeavouring to do the right thing – but coming down hard on those who don’t.”
The FSA said it had found significant improvement in home and motor insurance press advertising, since it raised concerns in January.
In a review, the regulator found that 94% of advertisements issued by 28 firms fairly and accurately described what savings consumers would be able to achieve, while 6% contained misleading savings claims.
