The Insurance Brokers Registration Council (IBRC) has thrown out a disciplinary hearing over alleged unprofessional conduct because it took three years to bring the case to court.
Holgate Insurance Brokers claimed that former director Derek Wright had broken IBRC rules by paying cheques totalling £60,000 into his personal account between 1992 and 1996, rather than using a company broking account.
Wright, a 50% shareholder in Holgate and a Lloyd's Name, was also accused of deleting entries in the company's computer files.
He denied the charge of unprofessional conduct.
But the case was dropped by the IBRC after an administrative error allowed it to drag on for three years.
The IBRC investigating committee first reviewed the case in 1997.
A letter was sent to Wright's solicitors in March 1998 to say that disciplinary proceedings would go ahead. But this information was not passed on to the disciplinary committee.
IBRC chairman Alan Gavaghan said: “With hindsight, the investigating committee was a bit quick off the mark in doing this. Instead of waiting until all the evidence had been collected, they said the case was being referred to the disciplinary committee.”
At the final hearing last Thursday, counsel for Wright argued that the case should be thrown out under the rules set by the Insurance Brokers Registration Act 1977.
It states that disciplinary hearings should be held “as soon as may be” after the initial investigation was convened, and pointed out there had been a three-year time lag from the date the letter was sent.
The IBRC concurred with his conclusion and dropped the case against Wright.
Wright admits paying the premiums into his personal account, but he claims this was done on the basis of a verbal agreement with Holgate.
A civil case was brought before the High Court in 1997 and Wright was ordered to explain why the premium income was unaccounted for.
He admitted suppressing income from Holgate and repaid £115,000, of which £80,000 was legal costs.
The IBRC disciplinary committee has been hearing an average of eight cases per day in an attempt to clear the backlog before it is dissolved at the end of April.
There are just five cases left to be heard and any adjournments or continuations will be dealt with by the Treasury, says Gavaghan.
After the IBRC statute is repealed, insurance brokers will fall under the remit of the General Insurance Standards Council (GISC).
Technically, at the end of April, anyone will be able to call themselves an insurance broker.
But the Privy Council is expected to permit Chartered Insurance Institute-qualified brokers to be given the title “chartered insurance broker” to ensure standards are upheld.