FSA fines broker network director for PPI failings

The Financial Services Authority (FSA) has fined the director of a network for failing to properly supervise appointed representatives (AR) working on behalf of the firm.

David Head, director of Essex based mortgage and insurance broker network FT Compliance Services (FTCS), £10,500 for failing to properly supervise insurance brokers he knew had close links with a firm and individual previously disciplined by the regulator for payment protection insurance (PPI) failings.

FTCS operated as a network and recruited mortgage and insurance brokers as ARs. The FSA said that Mr Head was solely responsible for ensuring FTCS and its ARs were compliant but had failed to put in place systems and controls to ensure that the ARs made suitable recommendations.

The regulator found that Mr Head therefore exposed customers to the risk of purchasing unsuitable PPI.

While the number of sales in question was relatively small, the FSA’s investigation found that in cases where single premium PPI was sold:

• The ARs were not properly considering customers’ eligibility for PPI before making a recommendation;

• The ARs failed to consider whether any medical conditions or existing insurance cover made PPI unsuitable for a customer; and

• There was no evidence to suggest that customers were told that they could buy PPI from other providers which might be more suitable for their needs.

Margaret Cole, the FSA director of enforcement and financial crime said: “As a director of a network, Mr Head was personally responsible for ensuring that the ARs were properly supervised and he failed to do so. His failure is particularly disappointing given that he was on notice that two of the ARs had links with a person previously disciplined by the FSA for PPI failings.

“There is a serious responsibility attached to being an FSA approved person and Mr Head’s fine demonstrates that we will not tolerate failure to deliver on that responsibility.”