FCA fines Towergate £12.6m for client and insurer money failings

The Financial Conduct Authority has fined insurance intermediary Towergate Underwriting Group just over £2.6m for failings in relation to its protection of client and insurer money.

Towergate built up a shortfall of £12.6m in its client and insurer money bank accounts between June 2005 and December 2013 which went undetected due to systems and controls weaknesses.

The City watchdog also fined former Towergate client money officer Timothy Philip £60,000 and banned him from any direct responsibility for client and insurer money.

The FCA said Towergate transferred a total of £10.5m from its client money and insurer money bank accounts to the office bank account of an intermediate parent company. However, it failed to properly consider the implications of these transfers which resulted in accumulated deficits of £5 m in the client money bank accounts and £5.5m in its insurer money bank accounts.

Mark Steward, director of enforcement and market oversight at the FCA, said: “We have issued repeated warnings to the industry on the importance of complying with client money rules which are designed to ensure that client money is adequately protected in the event of a firm failing. There can be no excuses given these warnings and the stakes involved. In addition, the firm’s failings placed insurer money at risk of loss.

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