The Financial Services Authority (FSA) has fined John Folan, a director of Brentwood-based Key Mortgage Associates, £195,117 for insurance fraud and banned him from carrying on regulated financial services.
The regulator said the penalty handed to Folan included a £70,000 fine and the disgorgement of £125,117 which he obtained through commission.
According to the regulator, Folan submitted over 54 applications for life assurance and protection policies in his name, his wife’s name and in the name of family members between January 2008 and September 2009.
The applications were made without their knowledge and in three of them he also falsified signatures of family members, said FSA.
In each case Folan provided his own bank account details so that direct debit payments could be taken by the insurance providers.
The regulator said Folan aimed to keep up with the premiums, but when his money began to run out he took out further policies to secure more commission to cover the outstanding payments and before long however this process of ‘churning’ made the providers suspicious and they contacted the FSA.
Folan used his own address as the point of correspondence so that the people he was impersonating would never become suspicious when they received insurance documents out of the blue.
FSA added that when documentation was occasionally sent to family members he lied to them to conceal his true intent by saying he was submitting ‘sample policies’. Folan destroyed policy documents as soon as he received them so that he kept no audit trail of his wrongdoing.
FSA head of retail enforcement Tom Spender said this is a significant fine to reflect significant failings. Folan took advantage of his position as an FSA approved individual for his own personal gain, and at the same time took advantage of his close family. The FSA concluded that he lacks honesty and integrity.
"Folan’s actions tarnish the industry’s reputation, and that is why we continue to pursue these cases and publish the findings. Anybody working in the industry who is tempted to commit any type of insurance fraud should note the consequences of their actions," added Spender.