The Financial Services Authority has issued one of its biggest ever fines to the director of an insurance company that collected premiums but didn't put the policies in place.
The company, Jeffery Flanders (Consulting) Limited, had forged documentation to scam other insurance companies. The customers, many of whom were elderly or vulnerable, were left without adequate home and motor cover. Director Andre Jeffrey was hit with a £150,000 fine.
In a separate case four people have been banned from holding regulated finance positions, one of whom was fined £50,000, for their role in financial mismanagement at insurers Orion Direct Limited. Around £300,000 of the company's funds was used to set up a new insurance firm, Peppercom Plc.
This breached rules that say money taken in insurance premiums must be used primarily for providing cover. Although the policies appear to have remained valid, the misuse of funds increased the likelihood that the company would have been unable to make payouts.
The FSA's director of enforcement and financial crime, Margaret Cole, said "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."