The UK's Financial Services Authority has banned three directors of a London-based insurance business, BPS Insure, for failing to inform the FSA that BPS had a deficit of approximately GBP3 million in its client account and had misused client money.
Robert James, CEO, and directors Stuart Lawton and Paul Adams all worked at BPS until it went into administration. Months before, the Financial Services Authority (FSA) discovered that all three had continually failed to admit to the deficit from the time when they originally applied for authorization until the date of the visit.
They had also used client money in January and February 2005 to pay BPS’ general expenses, further increasing the deficit.
The FSA established that all three men knew that they should have informed the regulator about the deficit and that they were misusing client money. No clients were directly affected, but there was a risk that the directors’ actions could have left clients without the cover they had paid for.
Mr James, Mr Lawton and Mr Adams have all been banned from certain regulated financial services functions, including senior management, because they are not fit and proper to carry out those functions in terms of their honesty and integrity.
Jonathan Phelan, head of retail enforcement, said: The directors of BPS acted recklessly and without integrity. They failed to ensure that clients’ money was adequately protected and undermined consumers’ confidence in the insurance sector. Senior managers must recognize their responsibilities – they are personally responsible and the FSA will take action against directors who fail to act appropriately when carrying out their regulatory functions.