The Financial Conduct Authority has fined and banned an insurance director for redirecting payments of insurance premiums to third parties – increasing the risk that policyholders’ claims would not be paid.
The Financial Conduct Authority has fined and banned an insurance director for redirecting payments of insurance premiums to third parties – increasing the risk that policyholders’ claims would not be paid.
The behaviour of Shay Reches, who was director at the firm Coverall, led to the failure of several insurance schemes and three insurers going into administration.
This resulted in the Financial Services Compensation Scheme paying claims of £12.7m as at the end of 2015.
Reches was fined £1.05m and he agreed to pay £13.13m to three insurers. The payments will deprive Reches of the “indirect benefit” from his misconduct.
Action was also taken against Colin McIntosh, Millburn Insurance Company Limited (Millburn), Coverall, Robert Bygrave, Andrea Sadler, Wayne Redgrave and Bar Professions Limited (Bar), with the FCA handing out four bans.
Mark Steward, director of enforcement and market oversight, said: “This was a hugely complex case with the FCA liaising with over 20 regulators and agencies around the world.
“Mr Reches’ misconduct led to many solicitors and others being left without adequate insurance. He treated policyholders’ funds and their interests with reckless indifference and his misconduct was facilitated by an absence of proper controls by key persons at important stages of the insurance process. The FCA has also taken action against those responsible for poor controls and oversight.
“This case not only demonstrates the consequences of poor controls but also what can happen when the distribution chain becomes overly complex, participants fail to ask obvious questions or take rudimentary precautions, including those insurance intermediaries and brokers checking whether Mr Reches was approved to carry out the functions he was performing.”
