FSA settles proceedings against CIC underwriting agent
20/01/2005
The FSA has settled proceedings under the Financial Services and Markets Act 2000 (FSMA) against Hogarth Underwriting Agencies Limited (Hogarth) and William Dewsall, the Managing Director of Hogarth. The FSA's proceedings have been stayed and Hogarth has put arrangements in place with Brit Insurance (UK) Limited (Brit) so that policyholders are insured on the same terms as those offered by CIC Insurance Company SA of Greece (CIC) so that valid claims should now be met by Brit.
The FSA's proceedings claimed that both Mr Dewsall and Hogarth were 'knowingly concerned' in alleged breaches by CIC of the general prohibition on carrying out regulated activities (in this case carrying out insurance business) in s19 FSMA. These allegations were denied.
The FSA asked the Court for orders under ss380 and 382 FSMA requiring Hogarth and Mr Dewsall to take steps to remedy the alleged breaches and disgorge any profits they made as a result of being knowingly concerned in them. Hogarth and Mr Dewsall defended the action but worked with the FSA, without admitting liability, in settlement discussions to secure an appropriate outcome for policyholders.
David Mayhew, Acting Director of Enforcement at the FSA, said:
"This settlement is a good outcome for policyholders who should now have the insurance they bargained for. It is a criminal offence to operate without certain types of insurance. Innocent policyholders who deal with unauthorised insurers run the risk of substantial uninsured losses.
"It is the responsibility of those involved in recommending and selling insurance to make sure that they are clear about the status of the insurer they recommend. If they fail in that responsibility they should expect enforcement action."
Notes for editors
Background
In January 2004, the FSA warned consumers that CIC Insurance Company SA and CIC Insurance Company AVV had been carrying on insurance business in the UK, through UK underwriting agents, without authorisation to do so. This meant that any policy with them might not provide effective or enforceable insurance cover. CIC worked with the FSA to help secure an appropriate outcome for the Hogarth policyholders.
Carrying on insurance business has required authorisation in the UK since 1968 (when the Companies Act 1967 came into force). Since GI day on 14 January 2005, insurance mediation business now also requires authorisation.
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.