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FSA/PN/098/2008
02 September 2008

The Financial Services Authority (FSA) has banned three directors of a London-based insurance business, BPS Insure Limited, for failing to inform the FSA that BPS had a deficit of approximately £3 million in its client account and had misused client money.

Robert James, chief executive officer, and directors Stuart Lawton and Paul Adams all worked at BPS until it went into administration.  Months before, during a routine visit, the FSA discovered that all three had continually failed to admit to the deficit from the time when they originally applied for authorisation until the date of the visit.

They had also used client money in January and February 2005 to pay BPS’ general expenses, further increasing the deficit.

The FSA established that all three men knew that they should have informed the regulator about the deficit and that they were misusing client money.  No clients were directly affected, but there was a risk that the directors’ actions could have left clients without the cover they had paid for.

Jonathan Phelan, head of retail enforcement, said:

“The directors of BPS acted recklessly and without integrity.  They failed to ensure that clients’ money was adequately protected and undermined consumers’ confidence in the insurance sector.

“Senior managers must recognise their responsibilities – they are personally responsible and the FSA will take action against directors who fail to act appropriately when carrying out their regulatory functions.”

Robert James, Stuart Lawton and Paul Adams have all been banned from certain regulated financial services functions, including senior management, because they are not fit and proper to carry out those functions in terms of their honesty and integrity.

Notes for editors

1. The Final Notices for Robert James, Stuart Lawton and Paul Adams include the background to the case, the relevant statutory provisions and the regulatory requirements contravened.
2. 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.
3. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.