Release Date: 30th August 2018
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) has fined One Call Insurance Services Limited £684,000 for failing to protect client money adequately, breaching Principle 10 of the FCA’s Principles for Businesses, and various Client Money Rules. Additionally, One Call is restricted from charging renewal fees to customers for 90 days, costing the firm approximately £4.7 million.
During the period in question, One Call failed to correctly handle and segregate client money, especially in relation to their T36 motor insurance policies, which resulted in a substantial client money deficit of approximately £17.3 million. Despite warnings from external auditors about potential breaches, One Call continued its inadequate practices until the FCA’s intervention in December 2013.
Key Takeaways for Other Firms:
- Proper Risk Assessment: Regularly review and confirm the effectiveness of risk transfer agreements with insurers.
- Compliance with Client Money Rules: Ensure accurate and regular client money calculations and compliance with segregation requirements.
- Effective Governance: Assign knowledgeable and competent personnel to oversee client money handling.
- Response to Warnings: Act promptly on external auditor warnings and regulatory guidance.
- Segregation of Funds: Never commingle client money with the firm’s own funds and ensure proper segregation at all times.
In conclusion, the FCA’s action against One Call underscores the importance of stringent adherence to client money rules and robust governance. Firms must ensure that they have effective systems and controls to safeguard client money and avoid severe regulatory consequences.
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