Financial Conduct Authority (FCA) has today revealed that it will
fine an insurance intermediary £684,000 and its chief executive
£468,600, following what it called a “failure to arrange adequate
protection” and “inadvertent spending” of client money.
One Call Insurance Services Limited, also known as One Call, will
also be restricted from charging renewal fees to its customers for
121 days – a move which the FCA said is expected to cost the firm
approximately £4.6 million.
CEO and majority shareholder of the firm, John Lawrence
Radford, will also be prohibited from having any responsibility for
client money and/or insurer money in relation to regulated
activity in financial services, the FCA revealed.
The regulatory body said that between January 2005 and
September 2014, One Call received money in the course of its
activities as an insurance intermediary which it was required to
protect. The company failed to arrange adequate protection for
the client money, which breached Principle 10 of the FCA’s
Principles for Businesses and the Client Money Rules.
“In the FCA’s view, it failed to do so because, firstly, it failed to
appreciate that certain Terms of Business Agreements it wrote
business under did not provide effective risk transfer and failed to
operate its client money account in accordance with the Client
Money Rules,” the FCA said in a statement today.
“Secondly, from December 01, 2009, One Call failed to treat funds
advanced by a third-party premium finance provider in respect
of years two and three of an annual motor policy with a
subsequent two-year renewal price guarantee as client money.”
As a result, One Call “inadvertently spent client money,” resulting
in a substantial deficit of £17.3 million – which has since been
repaid – and exposing customers to a significant risk of loss, the
financial regulator went on to say.
Radford, who was responsible for client money between January
2005 and September 2011 and was personally responsible for
ensuring One Call complied with regulatory requirements in this
context, “failed to carry out his responsibilities with due skill, care
and diligence,” the FCA said.
This included failing to keep himself informed of changes to
regulatory requirements for handling client money and failing to
investigate or ensure that One Call acted on warnings that were
handed down by the company’s auditor.
The FCA said it also believes that Radford failed to ensure that One
Call established “robust systems and controls for assessing
whether effective risk transfer agreements with insurers were in
place, so that if any client money
shortfalls arose as a result of One Call’s failure, insurers rather
than customers would bear this risk.”
As a result, it said that Radford had been deemed not “fit and
proper” to have any responsibility for client money or insurer
money in the context of regulated financial services, due to what
it described as a “lack of competence.”
Both One Call and Radford agreed to settle at an early stage of the
investigation and, as a result, qualified for a 30% discount which
is reflected in the fines.
A connected company to One Call, One Insurance Limited (OIL),
has challenged the FCA’s findings and referred the case to the
The Tribunal will then determine the appropriate action for the
FCA to take, which may or may not result in amendments to the
decision notices revealed today, which the FCA said are therefore