Director "turned a blind eye" in £2m insurance fraud, says FSA

The FSA has fined and banned another director for his part in a £2m insurance scheme fraud involving London market insurers QBE and Markel.

Barry Williams, a director of Surety Guarantee Consultants Limited (SGC), has been fined £25,000 and banned from working in regulated financial services.

The regulator said that although he was not a participant in the fraud, as a director of SGC, Williams deliberately ignored his responsibilities as an approved person.

It said he "turned a blind eye" despite clear warnings about the true nature of the scheme.

Last year, Insurance Times reported on the FSA's banning of three insurance professionals, including two SGC employees, involved in the same fraud.

SGC was established in 2004 to issue surety bonds, holding binding authorities with Markel and QBE via its agent Amalfi between January 2005 and August 2006.

The FSA said it wrote business that exceeded its authorised limits, exposing Markel and QBE to greater liabilities than they had agreed.

In doing so, SGC made secret profits and withheld over £2mn that should have been paid to the insurers.

When SGC was audited by the insurers it produced false documents intended to show that it had kept within the terms of the binding authorities.

The FSA stated that Williams did not profit directly from the fraud, however, he deliberately ignored serious concerns about signing surety bonds on behalf of the insurers in excess of the agreed limits.

He was also found to have lied to the insurers to hide the scheme, allowing himself to become involved in the fraud.

FSA director of enforcement and financial crime, Margaret Cole, said: “In believing that he could be a ‘sleeping director’ without incurring any responsibility, Williams did not take his accountability as an approved person seriously. He recklessly abused the trust and confidence placed in him by leading London market insurers and by doing so enabled secret profits to be made from the fraud by his colleagues.

“The London market relies on the trust and integrity of those who work in it. This sort of breach of fiduciary duty and lack of integrity amounts to very serious misconduct and will not be tolerated in the insurance industry or anywhere else in financial services. We will continue to take action against anybody else tempted to act in this way.”

The Upper Tribunal (Tax and Chancery Chamber) halved William's fine to £25,000 in light of his personal circumstances. It upheld the decision to ban Williams and withdraw his existing approval.

The regulator said this latest action against Williams brings its involvement in the fraud case to a close.