FSA's ban on dishonest broker upheld
Wednesday 23rd May 2012
The FSA has banned self-appointed insurance broking director Derek Wright from performing any FSA-regulated functions.
Wright had previously worked as a director in the regulated insurance market, and in 2001 was disciplined by the Lloyd’s Disciplinary Tribunal. Wright thought he was not being fairly remunerated, and dishonestly diverted premiums and client money from his firm for his own use.
As a result he had been permanently banned from all Lloyd’s premises and was permanently suspended from conducting any insurance business at the firm.
From 1997, Wright ran Moorgate Insurance Agencies, a small insurance broker in Romford, Essex, which was authorised by the FSA from 2004 to 2008.
During this time Wright acted as a director of Moorgate, despite never having been approved by the FSA to fulfil the regulated functions associated with the role.
The only person within Moorgate who was approved to do so was Wright’s wife Mary, but she had little to do with the firm on a day-to-day basis.
Wright was responsible for submitting the firm’s Retail Mediation Activities Returns to the FSA, but these indicated that the firm’s capital resources were consistently below the level required by FSA rules, and also contained inaccuracies.
In February 2007, Wright informed the FSA that the firm’s capital resources deficit would be rectified by a further share issue. But while a copy of a Companies House form was submitted to the FSA purporting to show an allocation of shares to Wright, the annual returns submitted by the firm to Companies House later that year showed no new shareholdings.
The following year, the FSA asked Wright to prove that Moorgate’s creditors had been paid, and that debtors’ money had been collected. His response was that another broking firm had taken over responsibility for collection and payment of premiums, a change which had occurred without the FSA’s knowledge or consent.
Following the FSA’s original Decision Notice in March last year, Wright referred the matter to the Upper Tribunal.
In its response the Tribunal found his actions working at Moorgate suggested he had learned little from his experience at Lloyd’s.
The Tribunal found he had misled the FSA over who was carrying out functions at the firm, and that in addition to dishonesty he had a cavalier attitude to regulatory compliance.
Tom Spender, the FSA’s head of retail enforcement, said: “This case graphically illustrates the dishonesty and lack of integrity that some brokers will exercise if it suits their purposes. Wright dishonestly sought to hide his past and rehabilitate himself by posing as someone authorised to carry out regulated functions for Moorgate, when he was not.
“The FSA will continue to take strong action whenever we see this type of conduct.”
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