Specialist team numbers to grow following lifetime prohibition of former Target Underwriting boss
The FSA is stepping up its crackdown on the mishandling of client money by boosting the size of its 22-strong dedicated client money team.
The increase comes in the wake of the watchdog’s lifetime ban last week on former Target Underwriting chief executive David Marriott.
Head of retail enforcement Will Amos said: “We are taking an increasingly hard approach to client money and we will come down hard.”
Commenting specifically on the general insurance broking sector, he said: “We are concerned that standards are not where they should be.”
Amos’s comments followed the authority’s prohibition order on Marriott, who was also chief executive of Professional Insurance Select Ltd (PISL). Both PISL and Target have since gone into liquidation.
The FSA said Marriott used the firms’ client money to support day-to-day finances. He also used client money to give himself and his staff bonuses and salary increases, and to purchase a £27,500 car for a fellow director and a £35,000 vehicle for himself.
By 2005, the firms’ client money accounts had a deficit of £570,841, according to the FSA.
It also said that Marriott had provided false and misleading information in his application for FSA authorisation. He told the FSA that client money was safe and that an audit had been conducted at the firms. Both statements were untrue.
The Financial Services and Markets Tribunal, upholding the FSA’s prohibition order, said that the former chief executive “demonstrated dishonesty and lack of integrity in allowing Target and PISL to misuse the client monies, to continue trading while insolvent and in his answers to the authority”.
Last week’s notice was published following a ruling by the Court of Appeal on 9 August refusing Marriott permission to appeal against the tribunal’s decision.
Under the FSA’s rules, firms are required to keep client money in segregated accounts.
FSA director of enforcement and financial crime Margaret Cole, who this week was appointed to the watchdog’s board, said: “The FSA has repeatedly emphasised the importance of ensuring that client money is adequately protected. Recent action in this area shows how our focus has intensified.”
For the full list of brokers banned by the FSA, go to our feature in The Lobby channel: The banned the insurance brokers caught mishandling client money