FSA bans three insurance professionals for a £2 million fraud
The Financial Services Authority (FSA) has yesterday banned Timothy Higgins, Clifford Felstead and Ralph Brunswick from working in regulated financial services.
All three men were involved in a scheme which defrauded Markel International Insurance Company (Markel), QBE Insurance (Europe) (QBE) and Amalfi Underwriting (Amalfi) over an extended period of time, exposing them to significant losses. Higgins would also have been fined £600,000 were it not for the fact that he had recently been made bankrupt.
Higgins was a director and founder of Surety Guarantee Consultants (SGC) a firm established in 2005 to write a form of insurance known as surety bonds and Felstead was an employee of SGC in a management role. SGC held binding authorities with London market insurers, Markel and QBE (through its agent Amalfi), to issue surety bonds. SGC 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 £2m 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. It was aided by Brunswick who provided false documents in the name of a company located in the Isle of Man, where he was employed at the time.
SGC also lied to QBE about Felstead's previous conviction for fraud. When QBE was informed that an SGC employee had a conviction, it was told by SGC that Felstead would be leaving the company with immediate effect. Instead Felstead continued to be involved in SGC's surety bond business.
Margaret Cole, FSA director of enforcement and financial crime, said:
"The London market relies on the trust and integrity of those who work in it. All three of these men fell woefully short of the standards expected of them. They abused the trust and confidence placed in them by leading London market insurers in order to make a profit for themselves.
"This sort of premeditated dishonesty will not be tolerated in the insurance industry or anywhere else in financial services. We will continue to take strong action against anybody else tempted to act in this way."
Higgins, Felstead and Brunswick were found to have conspired to defraud Markel and QBE/ Amalfi in a judgement handed down by Mr Justice Teare in the High Court of Justice in June 2008. Brunswick was also disqualified as a director for 13 years and 6 months by the Isle of Man regulator in March 2009. SGC ceased trading in January 2007.