The director of Essex-based mortgage and insurance broker network FT Compliance Services Limited (FTCS), was fined £10,500 for failing to properly supervise insurance brokers who he knew had close links with a firm and individual previously disciplined by the FSA for Payment Protection Insurance (PPI) failings.
FTCS operated as a network and recruited mortgage and insurance brokers as appointed representatives (ARs). Head was solely responsible for ensuring FTCS and its ARs were compliant but he failed to put in place systems and controls to ensure that the ARs made suitable recommendations. Head therefore exposed customers to the risk of purchasing unsuitable PPI.
While the number of sales in question was relatively small, the FSA’s investigation found that in cases where single premium PPI was sold:
• The ARs were not properly considering customers’ eligibility for PPI before making a recommendation;
• The ARs failed to consider whether any medical conditions or existing insurance cover made PPI unsuitable for a customer; and
• There was no evidence to suggest that customers were told that they could buy PPI from other providers which might be more suitable for their needs.
Margaret Cole, the FSA director of enforcement and financial crime said: “As a director of a network, Head was personally responsible for ensuring that the ARs were properly supervised and he failed to do so. His failure is particularly disappointing given that he was on notice that two of the ARs had links with a person previously disciplined by the FSA for PPI failings.
“There is a serious responsibility attached to being an FSA approved person and Head’s fine demonstrates that we will not tolerate failure to deliver on that responsibility.”
As Head admitted misconduct, agreed to settle at an early stage and was open and cooperative during the FSA investigation, he qualified for a 30% reduction in penalty. The FSA would have otherwise imposed a financial penalty of £15,000.
