Towergate Underwriting Group fined £2.63m by Financial Conduct Authority for client fund rule breaches
- Credit: Archant
An insurance firm with officess across East Anglia said yesterday it has already made major changes as it was hit with a £2.63m fine by the Financial Conduct Authority for breaching rules on handling client funds.
Towergate Underwriting Group Ltd, an insurance intermediary which holds both client and insurer money, accumulated a shortfall of £12.6m in its client and insurer money bank accounts which went undetected for several years.
The Financial Conduct Authority (FCA) blamed “systems and controls weaknesses”. Former Towergate client money officer and director Timothy Philip was also fined £60,000 and banned from direct responsibility for client and insurer money.
Towergate’s office locations include Bury St Edmunds, Ipswich, Lowestoft, Colchester and Chelmsford.
Mark Steward, FCA director of enforcement and market oversight, said the authority had issued repeated warnings on the need to comply with client money rules, designed to ensure client money is protected in the event of a firm failing.
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Senior management was ultimately responsible for ensuring that firms were following the rules and it was “very clear that Mr Philip failed in that regard”.
The firm’s failings occurred between June 2005 and December 2013 and included transferring sums totalling £10.5m to an intermediate parent company’s bank account, leaving deficits in Towergate’s insurer and client money accounts.
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Mr Philip was found to have instructed or approved withdrawals from client and insurer money bank accounts without following procedures on four occasions in 2010 and 2011.
The matters came to light in 2013, when Towergate completed its own checks and informed the FCA. No client money was lost and the firm rectified the shortfalls.
Towergate chairman John Tiner said: “While this issue is historical, 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.
“The company fully accepts the conclusions reached by the FCA, and the board is pleased that the regulator has recognised the company’s transparency and assistance throughout the process.
“Since identifying the issue, we have made a number of fundamental changes to our governance and control environment.”