Action urged after directors sentenced for series of scams
Biba is urging more whistleblowing on fraudsters after two broker conmen were jailed for more than 10 years over a £1m insurance scam.
Biba head of compliance and training Steve White said brokers should take the initiative, as they were more likely to spot fraud than consumers.
White said: “It’s very important for firms to whistleblow to the regulator when they sense there are things going on. This sort of thing harms our collective reputation. We all need to be vigilant to weed these people out. We don’t want them in our sector.”
Ideal Insurance co-directors Faron Wilson and Neil McKay were jailed this week for creating bogus insurance certificates, pocketing customers’ money without passing it on and cancelling policies without telling the customer and skimming off the remaining premium payments.
Faron Wilson was jailed for six years after being found guilty of one count of conspiracy to defraud.
Neil McKay was jailed for four years and four months after pleading guilty to one count of conspiracy to defraud.
Both will serve half their sentence, depending on good behaviour.
Judge Taylor at Southwark Crown Court said: “This was a high-value, planned, substantial fraud, concerning multiple victims over a five-year period and committed out of greed.”
The type of fraud carried out by Ideal is rare, said White, adding: “It’s not like there’s one in every town. It’s difficult to spot patterns.”
The pair started Ideal when McKay approached Faron in 1997 and asked him to partner a new business. The fraud was carried out between 2003 and 2008.
Primary General, now UK General Insurance, alerted the FSA to Ideal’s activities in February 2008 after Ideal failed to pay an outstanding sum of £62,000.
Ideal’s offices were raided by the FSA and the City of London police two months later.
Wilson had splashed out on a string of luxury cars, including a £27,000 Audi A6.
McKay deceived the FSA and continued to trade, despite being jailed for eight months in 1996 after admitting eight counts of obtaining property by deception.
Lloyd’s of London, Willis and RJ Kiln were all falsely put down as underwriters on bogus certificates. All three denied having any involvement with the pair.
McKay and Wilson were both banned from being directors of any company for 10 years.
A victim's story
Thomas Price nearly lost everything. He came dangerously close to bankruptcy after a lengthy legal battle that resulted from unknowingly buying a false policy from Ideal Insurance.
Price says he will "never trust a broker again" and he will now buy his insurance directly from a bank. He helps run the Elms Hotel and Restaurant near Chester, and switched his public and employers' liability cover from Clear to Ideal in 2003 when Ideal offered a cheaper premium.
Price received a public liability claim on his business when a woman claimed she was knocked over by a dog in the car park, and Ideal reassured him they would deal with it. However, they only paid out a small part of the claim and Price was eventually sued by the claimant.
After a lengthy court battle, Price was left with a legal bill for more than Â£100,000.
He had to spend all of his savings and borrow money from friends and family to gather enough money, and now he cannot retire. He is still fighting for compensation.