Broker moved £630,909 of client premium to its own accounts
David Lloyd Wren, chief executive of Astbury Wren, which went into administration in 2012, has been fined £70,000 and banned from undertaking any regulated activity by the FCA.
Wren oversaw the misappropriation of insurance premiums that led the broker to transfer £630,909 more than it was entitled to as commission to its own account that was used to pay for business expenses.
Between March 2009 and February 2012 the broker received £10,726,918 of client premiums into the trust accounts. Astbury Wren earned £2,081,022 in commission, but transferred £2,711,931 from the trust accounts to Astbury Wren’s office account.
In a notice today the FCA said Wren, who approved the transfers, knew the amount of money transferred did not match the commission earned and that it was transferred to reduce the broker’s office account overdraft.
The regulator said: “Mr Wren poses a serious risk to consumers and to confidence in the financial system.
“The authority considers that a financial penalty should be imposed to demonstrate to Mr Wren and others the seriousness with which the authority regards his behaviour.”
Wren said the commission was calculated automatically on the system by an administrator, before the transfer would be approved by him.
But he admitted there were occasions when he would approve the transfer of more money than the broker was entitled to, which was used to decrease Astbury Wren’s overdraft.
The regulator said it considered Wren’s breach and misconduct to be so serious that the penalty would not be reduced for financial hardship reasons. The breach also allowed the broker to continue trading for longer than would otherwise have been possible and provided Wren with an income.
But he escaped a higher fine of £100,000 because he settled early and qualified for a 30% discount under the FCA’s executive scheme.
Broker in administration
Astbury Wren ceased trading on 20 February 2012 when it entered into administration.
The broker owed £1.4m to insurers for outstanding insurance premiums. Most of the policies had been arranged by Astbury Wren under risk transfer agreements.
However, out of the £1.4m, there were three customers who were not subject to risk transfer agreements who were asked to pay a total of £9,021 or face the cancellation of their policies.
On 8 February 2013, Astbury Wren moved into creditors’ voluntary liquidation. The insurance creditors are expected to receive 62p in the £1, plus 1.3p in the £1 from the non-trust assets, as part of the liquidation.