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UK regulator fines underwriter $4.5 million

The UK’s Financial Conduct Authority (FCA) has fined Towergate Underwriting Group £2.63 million ($4.56 million) for breaching rules on the handling of client and insurer money.

Former Towergate client money officer Timothy Philip was fined £60,000 ($104,126) for failing to exercise due responsibility between June 2005 and last December, when the offences occurred.

“We have issued repeated warnings to the industry on the importance of complying with client money rules, which are designed to ensure client money is adequately protected in the event of a firm failing,” FCA Director of Enforcement and Market Oversight Mark Steward said. “In addition, the firm’s failings placed insurer money at risk of loss.

“Senior management are ultimately responsible for ensuring firms are following our rules and it is very clear Mr Philip failed in that regard, falling well below the standards we require.”

FCA investigations exposed “systems and controls weaknesses” in the way Towergate, an insurance intermediary, managed its client and insurer money bank accounts.

Towergate’s failures caused a £12.6 million ($21.8 million) shortfall in the two accounts at one stage.

“Despite the failures there was no actual loss of client or insurer money and Towergate did in time rectify the shortfall,” the FCA says. “However, had the firm become insolvent during the period when the shortfall existed, insurers were at risk of losing money and may have experienced complications in recovering their money.”