FCA decision notice reveals past reckless spending by Doncaster-based One Call Insurance, which inadvertently burned through £17.3m of clients’ money

The FCA has hit One Call with fines and trading restrictions costing more than £5m after it broke client money rules.

The Doncaster-based broker is fined £684,000 and restricted from charging renewal fees for 121 days – likely to cost it another £4.6m.

One Call used customers’ money, which was meant to be protected, to fund day-to-day business and even pay directors.

The rule breaking, which left a £17.3m hole in the client money account, may have even allowed One Call to undercut rival brokers on pricing.

And if One Call had gone bust, customers would have been unable to get refunds and left without insurance cover, having to then pay it twice. 

Chief executive John Radford was fined £468,600.

Premium finance money breaches

One Call was guilty of breaking the FCA’s Client Money Rules between January 2005 and September 2015.

According to the FCA decision notice, the broker “failed to appreciate” that some terms of business agreements it wrote business under “did not provide effective risk transfer”.

In one specific instance, in December 2009, the broker failed to treat funds from a premium finance provider as client money.

This was despite warnings from its external auditors, which had cautioned that its treatment of client money “may have been inadequate.”

As a result, the broker spent £17.3m of their money on payments to directors, funding its own working capital requirements and capitalising connected company One Insurance Limited (OIL). OIL is not implicated as having done any wrongdoing in the decision notices.

Had One Call entered into insolvency proceedings, the available pool of client money would not have covered refunds to its customers.

Chief executive in firing line

Radford himself was placed under fire by the FCA, which slammed him as “not fit and proper to have any responsibility for client money or insurer money in the context of regulated financial services.”

The sanctions could have been even worse.

If Radford had not settled at an early stage of the investigation then he would have paid £669,531.

If the company had not pleaded guilty, the regulator could have forced the trading restrictions for 182 days, costing it an estimated £6.6m, and the company would have had to pay a fine of almost £1m.

One Call expresses “regret”

When contacted by Insurance Times, One Call expressed “regret” for the “miscalculation”.

A statement from One Call says that when Radford and the broker realised they had made the error, they immediately reported it to the FCA. Radford had already ceased to be responsible for client money in 2011, as the FCA recommended.

Since the incident, One Call has invested heavily in additional management and its systems and controls, as stated in the FCA decision notice.

One Call has taken responsibility for the mistakes. Part of its statement reads: “One Call Insurance Services accepted its mistake 4 years ago, implemented changes and resolved this matter with the FCA at the earliest opportunity. There has been no suggestion of any dishonesty and it is accepted that the mistakes were genuine.

”Throughout this period, no consumer was without Motor Insurance and neither were they at any financial loss. There was no commercial loss to any insurer or any other trading partner.

”One Call Insurance Services accepts the fine and restrictions imposed. One Call Insurance Services have been aware of the financial penalty for some time and have made financial provisions within forecasts.”

Some parts of the decision notices have been disputed by OIL and they have been referred to the Upper Tribunal.