The City watchdog has today fined Towergate Underwriting Group and one of its former directors more than £2m between them.
The Financial Conduct Authority (FCA) levied a fine of £2,632,000 on Towergate for failing to properly protect client and insurer money, after the underwriter racked up a £12.6m shortfall in its client and insurer money bank accounts.
The watchdog said that, thanks to systems and controls at the company not being up to scratch, the shortfall went undetected for a number of years.
The FCA also issued a fine of £60,000 on former Towergate client money officer and director Timothy Philip. Philip has also been banned from having direct responsibility for client and insurer money.
"We have issued repeated warnings to the industry on the importance of complying with client money rules which are designed to ensure that client money is adequately protected in the event of a firm failing," said Mark Steward, director of enforcement and market oversight at the FCA. "There can be no excuses given these warnings and the stakes involved. In addition, the firm’s failings placed insurer money at risk of loss.
“Senior management are ultimately responsible for ensuring that firms are following our rules and it is very clear that Philip failed in that regard, falling well below the standards we require."
John Tiner, chairman of Towergate, 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.
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.
Both Towergate and Philip were given a discount to their fines because they agreed to settle at an early stage. Had Towergate and Philip not done so, they would have been fined £3,760,000 and £85,817.97 respectively.