The UK’s Financial Conduct Authority (FCA) has imposed a £2.6m fine against Towergate Underwriting Group for failing to protect client and insurer money.
Towergate, which is an insurance intermediary that holds both client and insurer money, has been fined as a result of £12.6m deficit amount in its client and insurer money bank accounts.
Former Towergate client money officer and CF1 (director) Timothy Philip has also been fined £60,000. The FCA also barred Philip from having direct responsibility for client and insurer money.
Towergate’s failings include transfer of £10.5m from its client money and insurer money bank accounts to the office bank account of an intermediate parent company on four occasions.
The company is permitted to retain all interest on balances held on client money bank accounts, as part of its arrangements with clients.
Towergate also transferred £2.13m a client money bank account to an insurer money bank account in October 2007.
From December 2008, in breach of its agreements with insurers, the company changed the basis upon which it removed commission owed to it by insurers from its insurer money bank accounts, resulting in a £3.6m deficit in the firm’s insurer money bank accounts.
The FCA has witnessed that Philip failed to exercise due skill, care and diligence in managing the business for which he was responsible.
Towergate chairman John Tiner said: “While this issue is historic, isolated, and had no financial impact on any clients or insurer partners, it does not excuse the fact that the Company failed to live up to the high standards we expect of ourselves at Towergate and we deeply regret it occurred. “
Image: Towergate chairman John Tiner. Photo: courtesy of Towergate Insurance Limited.