The Financial Services Authority (FSA) has fined £2,170,000 Direct Line Insurance (Direct Line) and Churchill Insurance (Churchill) for failing to prevent files that the FSA had requested from being improperly altered.

According to FSA, out of 50 complaint files requested for review to further assess the effectiveness in 2010, 27 were altered improperly before they were submitted as the Firms failed to act with due skill, care and diligence.

A detailed internal investigation conducted by the Firms revealed that seven internal documents were found to contain staff signatures forged by one member of staff.

FSA’s acting director of enforcement and financial crime Tracey McDermott said that the Firms failed to give clear instructions resulting in staff making inappropriate alterations with one individual even forging the signatures of colleagues. The Firms’ management did not know what changes had been made or when.

The Firms qualified for a 30% discount for having agreed to settle the case at an early stage. Without the reduction the FSA would have fined them £3.1m.