FSA also fines former executive Yohichi Kumagai £119,303

The FSA’s £3.34m fining of Mitsui Sumitomo Insurance (Europe) for serious corporate governance failings - plus fining its former executive chairman, Yohichi Kumagai, £119,303 and banning him from insurance - indicates a failing at both board and parent company level, according to one market commentator.

Kumagai failed to fill key posts with experienced staff, as well as failing to ensure appropriate governance and control measures were in place.

Branko consultancy principal Branko Bjelobaba said Kumagai lacked critical board support. “Appointed members have collegiate responsibility to each other.

“I think this is a skill mismatch between how they operate in the Japanese market and how we operate in the European and UK market. The Japanese know how to run a good business, but I doubt whether that has synergies with how things are run in the UK,” Bjelobaba said.

He added that MSIEu should have brought in external consultants to deal with cultural and language barriers, and that not employing a chief underwriter was “just daft”.

MSIEu said in a statement that it had fully co-operated with the FSA during the investigation and accepts the FSA’s final notice, adding it takes the matter “very seriously”.

“The company is disappointed that during this period its corporate governance and controls were not up to the standards the company expects,” the MSIEu statement said.

Kumagai’s resignation from MSIEu was agreed by all parties as soon as the investigation began.