Last week’s was a real humdinger, with the CEO of two insurance broker firms plundering client money to buy a £35,000 car for himself and keep the businesses ticking over. He also bought a £27,500 car for a fellow director and gave his staff salary increases – a nice thought – but one which helped get his companies in £570,841 of debt.
The fine and ban story just two days before that involved another real car crash of a broker firm, excuse the pun.
Based in Harrow, the Principal ignored warnings her business was being used as a cover to commit mortgage fraud with her employees using her log in to submit fraudulent mortgage applications. One employee was still using the log in to submit a dodgy application five months after leaving the firm, but the Principal made no changes to business practice at all.
In July alone, eight mortgage or insurance firms were fined or banned completely and the FSA said 80 or 90 firms from this sector alone have been censured in the last couple of years. Why does the mortgage and insurance arena seem to produce such high numbers of small firm wrongdoers?
A common reader refrain is that the FSA consistently targets small, often one-man band firms with little legal back up, instead of multi-million pound conglomerates. Although Zurich Insurance was slapped with a £2,275,000 fine, the biggest yet for a data breach, after it lost 46,000 policyholders personal details. Royal Bank of Scotland and Societe Generale have also been fined millions for recent misdemeanours, so the charge of going after the little guy holds less water than it used to.
An FSA spokesman said the biggest difference between the large and small firms is that the bigger firms tend to turn themselves in to the regulator. You can’t imagine many of the smaller guys doing that, but again, probably because the big banks know they can cope with whatever comes next, where an FSA fine or ban is the end of the road for many small firms.
Small firms are easy pickings with straightforward wrongs picked up through FSA visits or flagged by whistleblowers. Larger firms can protect themselves in a thousand ways, armed with the money, time and employees to head off trouble.
Some of the stories from large and small firms are laughably shocking, or just uncomfortable reading. But with a beefed up FSA enforcement arm, which means business and the ongoing downturn, there’s no end in sight for FSA ban and fine stories for now.
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And now for something completely different
Wait for it…..
http://www.youtube.com/watch?v=4gyR0ZIdoMM
