Lancashire broker banned for inadequate control of his firm and loses business

The FSA has banned Graham Darby, director of insurance broker Ambrose Darby, for failing to control the business of the firm adequately.

The order bans Darby performing significant influence functions at any authorised financial firm. The FSA has also shut down Ambrose Darby, based in Nelson, Lancashire.

The FSA found that Darby, who was diagnosed in July 2008 with a severe medical condition, did not conduct client money reconciliations as required and did not have a full understanding of the firm’s responsibilities regarding the handling of client money.

The FSA also petitioned for the winding up of Ambrose Darby on the basis that Darby, as a result of his illness, was not able to resolve the client money issues at the firm and wind up the company himself in an orderly fashion and there was no other officer of the firm who was able to do this. The winding up order was granted on 10 March 2009. It is the first time the FSA has exercised its insolvency powers under Section 367 of the Financial Services and Markets Act 2000 in relation to a regulated small retail firm.

The FSA found that there were no systems and controls in operation at the firm to manage the receipt of monies from customers or to effect the payment of premiums to insurance providers; it appeared at one time that it owed insurance providers £83,814.71 and was owed £61,961 from customers (some of which had been outstanding for more than 90 days); and due to Darby’s medical condition and the absence of structured systems and controls the firm lacked adequate resources from both a financial and personnel point of view. Following the diagnosis of his illness he did not seek assistance to deal with his business affairs.

Margaret Cole, FSA director of enforcement, said: “The FSA is sympathetic with regard to Darby’s medical condition, but the consequence nonetheless was that it was unclear both to customers and providers who was responsible for the day-to-day operation of the firm while he was absent. This was unacceptable. Directors must demonstrate their capability to ensure their firm meets compliance standards and those who do not do so face being banned from senior roles in the financial services industry.

"The case is notable for the first use of our insolvency powers on ‘just and equitable’ grounds with a regulated small retail firm and in similar cases we will not hesitate to use this winding up power to protect consumers and their money.”

Ambrose Darby is currently in liquidation and is no longer authorised to conduct regulated business.