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Insurance Directors Fined £1m By The FCA

swinton insurance fineThe Financial Conduct Authority (FCA) has banned a group of 3 from their senior roles in the financial services sector after their involvement in an aggressive, unnecessary insurance policy selling scheme to try and crawl their way into a £90m bonus pool.

The 3 men used to work for the insurance firm Swinton. They have been fined £928,000 between themselves after it was discovered that they were operating a large-scale miss-selling operation for some of their insurance products. The City Regulator (the FCA) said: “The former bosses had driven an aggressive sales strategy of often unnecessary insurance products to try to share in a £90m bonus pool.”

The three men (former chief executive Peter Haplin, former marketing director Nicholas Bowyer and former finance director Anthony Clare) have been banned from ever being able to hold any major positions in any financial service firm by the FCA. The FCA’s director of enforcement and financial crime Tracey McDermott said: “A culture was allowed to develop within Swinton that pushed for high sales and increased profit without regard to the impact on the firm’s customers. We expect firms to put their customers at the heart of the business. These three directors should have recognised the risk to customers and redressed the balance so that the drive to maximise profits did not jeopardise the fair treatment of customers. Those with significant influence within firms are responsible for setting the tone and the culture; they set the example that others will follow.”

This recent fine is a follow-up to a £7.4m fine that Swinton received last year. This will hopefully send a reminder to other firms that the FCA can and will hold individuals responsible if they don’t meet the standards that have been set by the regulator. These 3 men were acting on their own interests because of the bonus they would receive if Swinton hit their profit targets for the year.

The FCA added: “We have found that the sales-focused culture in Swinton was encouraged by Clare and Bowyer driving a business strategy that was designed to boost the firm’s profits in 2011. Swinton’s participating directors stood to gain a bonus of approximately £90m under the directors share scheme if operating profits reached £110m in 2011. Halpin, Clare and Bowyer would have benefited significantly under the scheme had these results been achieved.

All 3 former directors quickly settled their fines with the FCA, making them eligible for a 30% discount. Halpin released a statement saying: “I sincerely regret any possible unintended detriment suffered by customers. I acted in good faith at all times and it is of some significant comfort that the regulator did not impugn my integrity, nor fin that my conduct was improperly motivated by incentive arrangements.”

James Savery, 11 November 2014

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