WIREDGOV

The Financial Services Authority (FSA) has banned two directors of an insurance broker for failing to ensure that their firm complied with FSA client money rules.

Roger Muse and his son Daniel Muse are prohibited for three years from performing any significant influence functions at firms carrying out regulated financial activities.  This order will prevent them from running or managing a regulated business whether as sole traders, employees or appointed representatives of another firm.

Margaret Cole, FSA Director of Enforcement, said:

"This three year ban should send out a clear message that prohibitions will be used to protect consumers where senior management fail to demonstrate that they are able and willing to comply with their regulatory obligations.  Both of these directors failed to discharge their duties as approved persons to ensure that their firm complied with the FSA’s client money rules. Although no clients were directly affected, the systems and controls for handling client money at this firm were wholly inadequate.  The FSA’s rules – relating to proper segregation and accounting for client money held by firms – are a vital protection for consumers.  The FSA will not wait for client money to be lost before taking action, and senior management will be held personally responsible for ensuring that their firms comply."

Roger Muse and Daniel Muse failed to ensure that:

• proper records were kept relating to the firm’s transactions and commitments in respect of client money;
• client money calculations were performed at the firm and that the firm kept a record of how it performed the calculations;
• the firm dealt with any shortfall or surplus in client money in accordance with the FSA’s rules relating to client money;
• written notice was provided to the firm’s bank that monies in its client bank account were held by the firm as trustee; and
• the firm notified the FSA that it was not performing the client money calculations. 

Notes for editors

1. The Final Notices for Roger Muse and Daniel Muse include the background to the case, the relevant statutory provisions and the regulatory requirements contravened and factors taken into account.
2. Roger Muse and Daniel Muse were Directors of FHI (Northern) Limited, a small general insurance intermediary business, based in Tyne & Wear, with mainly commercial clients, including football clubs and taxi firms, and some retail clients.  It was authorised on 15 January 2005 and ceased trading on 1 May 2006. 
3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
4. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.