Five advisers have received bans from the FSA for failings in relation to insurance fraud.
The regulator has also imposed one of its largest ever fines of £150,000 for insurance fraud on one of these individuals, and £50,000 on another.
Andrew Jeffery, director of Jeffery Flanders (Consulting) Limited has been banned and fined £150,000 – one of the largest fines imposed on an individual for insurance fraud.
Jeffery was found to have ‘recklessly’ failed to put in place insurance policies appropriately or, in some cases, at all, despite collecting payment from customers. In so doing, he exposed customers to risks such as not having adequate household or motor insurance.
The FSA said that this was particularly serious as many of the customers were elderly or vulnerable. The director also knowingly forged documentation and correspondence potentially to mislead insurance companies.
To complicate matters further, Jeffery then reportedly obstructed the FSA’s investigation by failing to report changes to the firm’s contact details, as well as not providing documents or attending meetings at the request of the FSA.
The second adviser to be banned has been named as Barrie Duncan Aspden. He has been banned from performing any regulated role in financial services after being found to have acted dishonestly and without integrity.
Aspden knowingly used approximately £300,000 of Orion client money to finance the creation of a new company “Click the Pepper”, an online motor insurance site, which traded as Peppercom. His actions meant that several hundred customers of Orion were put at risk of being uninsured because their premiums were misused.
Aspden’s conduct demonstrated a fundamental disregard for regulation. Having been made bankrupt and unable to obtain approved person status, Aspden put in place three directors at Orion and Peppercom including two relatives and a family friend. All three directors lacked the competence and skills to perform their roles. This enabled him to control the business without the relevant FSA approval.
Melanie Aspden, Barrie Aspden’s wife, and Gaenor Clayton, his sister-in-law, have also been banned for their failure to demonstrate competence and capability as directors at Orion and Peppercom.
They were not involved in decision-making or financial management but instead delegated these responsibilities to Barrie Aspden, an unapproved person.
They both failed to ensure client funds were used solely for the purposes they were provided for, resulting in Barrie Aspden using approximately £300,000 of Orion’s client money to fund the development of the Peppercom business.
Both Melanie Aspden and Gaenor Clayton admitted to not having the necessary experience for the director role. Had they not demonstrated financial hardship they would have each been fined £35,000.
Paul Willment, director and non-executive director of Orion and Peppercom, has been fined £50,000 and banned from financial services, also for his failure to demonstrate competence and capability.
Willment rarely attended Orion’s offices, had no active involvement in the management of the business and delegated his roles and duties to the unapproved employee Barrie Aspden.
Between September and November 2007, Barrie Aspden withdrew over £300,000 from Orion’s client money account to fund Peppercom’s development. Willment was aware of the transfers but did not challenge Aspden about it.
As a result, Aspden was able to commit insurance fraud.
Margaret Cole, director of enforcement and financial crime at the FSA, commented on the bans, saying: “These five individuals acted with complete disregard for the interests of their customers and the FSA’s regulatory requirements.
“Individuals holding a significant influence function role such as that of director must act with integrity as well as with the skill, care and diligence necessary to manage effectively the businesses for which they are responsible.
“The FSA does not tolerate these types of failings. We will continue to take action against those who commit insurance fraud, as well as those who fail to take action to prevent it.”
The actions of Barrie Aspden came to light following information that the FSA received through its whistle blowing line.
The FSA’s Small Firms and Contact Division looked into this further before referring the matter on to Enforcement for full investigation.
Since the beginning of this year, the FSA has banned 14 individuals for failings relating to insurance businesses, with fines totalling over £500,000.
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