WIREDGOV

The Financial Services Authority (FSA) has banned two insurance brokers, Andrew Porter and Alexander Brincat, from working in the financial services industry. 

It has also withdrawn the permissions of Brincat’s insurance firm; Wise Owl Services Limited (Wise Owl).

Porter was the sole shareholder and the only broker at Porter Insurance which specialised in providing insurance policies for businesses and individuals.

The FSA found that while a broker and director of Porter Insurance Andrew Porter had deliberately:

• underinsured clients, retaining the surplus money for his benefit;
• exposed companies to the risk of significant financial loss by misleading them into paying for cover, which, unknown to them, was neither suitable nor appropriate for their business needs, leading them to be underinsured; and
• falsified documentation in the names of companies to mislead those clients and recipient insurance companies.

The FSA considers Porter’s dishonest conduct to be serious because he abused the trust and confidence his clients and recipient insurance companies placed upon him, exposing the clients to significant financial losses. He posed a risk both to consumers and to insurance companies, and to confidence in the financial system.

Brincat was the sole director and a shareholder of Wise Owl, a small firm specialising in insurance policies for buildings and life insurance.

The FSA found that between September 2009 and August 2010 Alexander Brincat had:

• failed to monitor adequately the high cancellation rate of life insurance policies sold by Wise Owl, and failed to disclose to Wise Owl’s insurance providers that it had a sales strategy of offering free life cover to customers;
• left the country for prolonged periods without putting in place adequate compliance arrangements at Wise Owl;
• failed to ensure that Wise Owl had sufficient resources to pay premiums due to customers who had agreed to the free life cover offered by Wise Owl, and repay sums of commission claw back owed to insurance providers when such cover was cancelled; and
• failed to monitor Wise Owl’s financial position, including the extent of Wise Owl’s liabilities to insurance providers.

Brincat’s failings are serious due to the significant losses incurred by Wise Owl’s insurance providers, and his abandonment of the authorised business. The FSA has therefore decided to ban him from performing any function in relation to any regulated activity.

Tracey McDermott, acting director of enforcement and financial crime commenting on both cases, said:

''Andrew Porter deliberately underinsured clients, many of whom were involved in high risk trades. He provided them with policies he knew were potentially worthless and would not payout if they suffered an accident. This is not only a dishonest and deliberate failing in his responsibility as an approved person, but a complete breach of trust with his clients.''

McDermott continued:

''Alexander Brincat’s incompetence at Wise Owl posed a risk to other market participants and to confidence in the financial system. In order to remove this risk Brincat has been banned. We will continue to take action against individuals who, either through incompetence or fraudulent activity, allow their firms to cause such losses to other market participants.''

Notes to Editors

1. Read the Wise Owl, Alexander Brincat and Andrew Porter Final Notices.
2. Porter Insurance was an insurance brokerage company established by Andrew Porter in October 1991. He was the 100% shareholder of Porter Insurance and was its only general insurance broker for contracts covering personal business, motor and household insurance and placed commercial insurance for businesses. Porter Insurance employed four other permanent employees who had purely administrative roles and responsibilities within the business, but Porter was responsible for and controlled all commercial business. All decisions of substance were made by him. Porter Insurance Brokers Limited was sold to a third party in June 2007 and therefore no longer exists.
3. Porter Insurance dealt mainly with wholesale brokers rather than dealing directly with a particular insurer because of the size of the firms for which it was seeking to place insurance. Porter Insurance charged its clients a mixture of fees and commissions, but was remunerated mainly through commission.
4. Wise Owl was a small mortgage and insurance mediation firm, whose main business concerned building and life insurance. With effect from 24 November 2008, Wise Owl was authorised and regulated by the FSA. Alexander Brincat was the only approved person at Wise Owl, holding the controlled function of CF1 (Director). He is also responsible for insurance mediation.
5. One of Wise Owl’s insurance company providers petitioned for Wise Owl to be wound up on 3 December 2010. This petition was granted on 3 March 2011 and Wise Owl is now in liquidation.
6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.