Insurance: FSA acts against brokers who failed to protect clients' money

The action is against two insurance brokers - Delwyn Way of Shield Insurance Consultancy Ltd (Shield) and Adrian Shillaker of Griffiths McAlister Insurance Brokers Ltd (Griffiths McAlister) - for failing to adequately protect clients’ money and assets.

Shield’s director, Delwyn Way, has been fined £77,957 and banned from working in financial services for putting clients at risk by failing to ensure their insurance premiums were passed onto insurers. The fine covers the estimated amount of client money and assets that Way embezzled from Shield’s client money account to fund business and personal expenses.

Griffiths McAlister’s director, Adrian Shillaker, has been banned from working in financial services with immediate effect for knowingly transferring client money to Griffith McAlister’s business account to fund its business expenses. Shillaker also failed to ensure the client money was managed in accordance with the FSA’s Client Money rules including failing to segregate client money from other funds. Shillaker’s failings left customers at risk of losing their money. The FSA has also cancelled the permission of the firm.

A financial penalty has not been imposed on Shillaker as he provided evidence this would cause him serious financial hardship. Shillaker has taken steps to ensure that monies owed to customers have been repaid.

Both cases demonstrate a lack of integrity and honesty on the part of both directors in that they both failed to take responsibility to protect clients’ money and assets in compliance with the Client Assets Sourcebook (CASS) rules, says the FSA.

This area is clearly the FSA's flavour of the month: it has established a new unit to enhance and strengthen the FSA’s existing capabilities in the area of client money and assets. The unit consists of teams responsible for specialist supervision, policy, data analysis and risk management.

In addition to the JP Morgan action which received substantial media coverage due to the size of the fine, the FSA has also fined Rowan Dartington and Close Investments Limited for breaches of the Client Money rules.