FSA fines AIF director for AR failings

by Gill Montia

Story link: FSA fines AIF director for AR failings

The Financial Services Authority (FSA) has fined a director of insurance broker AIF Limited £20,020, for control failings in relation to an appointed representative firm (AR).

The regulator found that in 2006, Richard Holmes appointed an AR without carrying out the necessary checks, relying instead on assurances from two business contacts both of whom were banned by the FSA in the November.

The AR was then reported to have premiums outstanding and to be failing to pay premiums to AIF promptly.

Mr Holmes again relied on assurances rather than increasing his monitoring of the AR or investigating the way in which business was being carried out.

It then emerged that the AR had received clients’ premiums but failed to pass them on to the underwriter, leaving the clients uninsured.

In addition, the AR had instructed AIF to arrange insurance policies on behalf of clients but had failed to pass on premiums.

The FSA said it was satisfied with the action taken by AIF to arrange alternative insurance for the clients left uninsured.

The regulator’s head of retail enforcement, Jonathan Phelan, says: “Senior management at firms are responsible for the standards and conduct of the businesses they run – this applies to all firms both large and small. In particular, senior managers should ensure that their appointed representatives are appropriately overseen.”

The size of the penalty takes into account the FSA’s view that Mr Holmes did not deliberately set out to contravene its requirements and that he co-operated with the FSA and took remedial action to ensure clients were not left uninsured.