Alan Dennis Garlick (“Mr Garlick”), a director of Chapel Finance Limited was prohibited from carrying out regulated activities due to his management failures and lack of skill, care and diligence. Chapel Finance Limited, which was based in Swindon went into administration on 8 February 2006. The FSA had previously released a consumer warning about the firm on 26 May 2006.
Mr Garlick had failed to ensure that guaranteed asset protection policies and payment protection policies sold during the beginning of 2005 were in fact issued. It was also found that Chapel Finance Limited held client money although it was not authorised to do so and therefore was in breach of the FSA’s client money rules. The FSA found Mr Garlick to have breached Statements of Principle, 2, 6 and 7 for Approved Persons.
Sesame Limited (“Sesame”) was fined £330,000 for breaches of Principles 2 and 6 of the Principles for Businesses and the Dispute Resolution Complaints Handling section of the FSA handbook.
The FSA found that Sesame’s complaints department had failed to consistently conduct adequate investigations or make further enquiries and rejected complaints without sufficient evidence, failed to provide appropriate guidance and training to complaints handlers and to monitor their procedures were being followed consistently. Sesame cooperated fully with the FSA during the investigation and re-reviewed all the relevant complaints. In addition it engaged external advisers to comment on procedures for handling the relevant complaints and training complaint handlers.
Kilminster Financial Management Limited (“Kilminster”), a network of Independent Financial Advisers, was fined £42,000 on 11 June 2007 for failures in relation to management and complaints handling. The FSA found Kilminster to have breached Principle 3 (management and control) and 6 (customers’ interests).
Kilminster was found to have failed to treat its customers fairly because it was not handling complaints in good time and in addition it did not monitor its staff sufficiently or keep appropriate training and competence records. The breaches concerned complaints handled between 1 January 2004 and 23 August 2006.
The FSA viewed the failings as particularly serious due to Kilminster’s poor regulatory history and the concerns of the Personal Investment Authority in April 2000 and May 2001 that lead to remedial actions. Kilminster agreed to settle at an early stage of the FSA’s investigation and therefore qualified for a 30% discount under the executive settlement procedure.
Dan William King (“Mr King”) was prohibited from managing, controlling or having significant influence over any persons or companies allowed to carry out FSA regulated activities. The FSA took action against Mr King because two entities under his management, CIC Costa Rica and CIC Greece (“CIC”), operated illegally by writing insurance in the UK without being authorised. More than 1,800 insurance policies were issued to UK businesses, which meant that the policyholders did not have insurance and risked substantial loss and even prosecution.
Margaret Cole, the FSA Director of Enforcement said:
“Mr King’s conduct showed a lack of competence, integrity and honesty which seriously undermined consumers’ confidence in the insurance sector”.
In November 2006 the FSA obtained approval from the High Court to distribute nearly £650,000 to policyholders who bought insurance from CIC. It had previously warned CIC policyholders in January 2004 to arrange new insurance cover immediately. In February 2004 the FSA wrote to policyholders warning that CIC was not authorised and encouraged them to obtain alternative cover.