By Max Clarke
The Financial Services Authority (FSA) has fined Barry Williams £25,000 and banned him from working in regulated financial services for his part in a scheme that defrauded leading London market insurers of more than £2 million.
Whilst not a participant in the fraud, as a director of Surety Guarantee Consultants Limited (SGC), Williams deliberately ignored his responsibilities as an approved person, turning a blind eye despite clear warnings about the true nature of the scheme.
SGC was established in 2004 to write a form of insurance known as surety bonds. Between January 2005 and August 2006 SGC held binding authorities with London market insurers, Markel and QBE (through its agent Amalfi) and wrote business that exceeded its authorised limits, exposing Markel and QBE to greater liabilities than they had agreed. In doing so, SGC made secret profits and withheld over £2 million that should have been paid to the insurers.
When SGC was audited by the insurers it produced false documents intended to show that it had kept within the terms of the binding authorities.
Williams did not profit directly from the fraud, however, he deliberately ignored serious concerns about signing surety bonds on behalf of the insurers in excess of the agreed limits. He was also found to have lied to the insurers to hide the scheme, allowing himself to become involved in the fraud.
Margaret Cole, FSA director of enforcement and financial crime, said:
"In believing that he could be a 'sleeping director' without incurring any responsibility, Williams did not take his accountability as an approved person seriously. He recklessly abused the trust and confidence placed in him by leading London market insurers and by doing so enabled secret profits to be made from the fraud by his colleagues.
"The London market relies on the trust and integrity of those who work in it. This sort of breach of fiduciary duty and lack of integrity amounts to very serious misconduct and will not be tolerated in the insurance industry or anywhere else in financial services. We will continue to take action against anybody else tempted to act in this way."
From a proposed fine of £50,000, The Upper Tribunal (Tax and Chancery Chamber) reduced the penalty to £25,000 in light of Williams' personal circumstances. It upheld the decision to ban Williams and withdraw his existing approval.
In July last year Timothy Higgins and Clifford Felstead of SGC and Ralph Brunswick of Templeton Insurance were banned from working in regulated financial services for their role in the fraud. The action against Barry Williams brings the FSA's enforcement action against all those active in the fraud to a close.