FSA bans trio for misusing client money

The 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.

Prospector AAA gets insurance upgrade

Trigold has upgraded the insurance functionality in Prospector AAA.

Using Norwich Union’s ‘Simplified Life’ quote system, advisors will be able to access indicative quick quotes for life insurance that will be automatically displayed when entering client information. Trigold offers a ‘unique’ system whereby quotes can be generated offline. The system also offers the ability to link into the insurance quotation systems of all other major insurance providers.

A cost planner facility displays a list and total of all mortgage and insurance product payments on the case, and insurance illustrations and mortgage KFIs can now be saved together in Prospector AAA.

Martin Colyer, managing director of Trigold, said: “With seven-out-of 10 mortgage advisors operating in the market relying on Trigold these improvements to Prospector AAA will help advisors generate new business through a much-valued additional income stream. The current economic climate means that advisors need to look at other ways in which they can generate income and insurance looks set to be a growth area over the next few months as clients look to policies that will help them if their circumstances change.

“The development of Prospector AAA will also help advisors bring the client’s insurance needs into the process early on in the application process rather than near to completion when it can be too late to help with any insurance requirements that the client may have.”

Broker boost for Select & Protect

Select & Protect has doubled its number of broker partner relationships to over 10,500 in the past 12 months.

Since the launch of Select & Protect’s new Elements proposition that offers brokers the choice of three underwriters but just one common policy wording, coupled with a revamped website where brokers can register quickly and simply online, broker registrations have significantly increased along with new business levels which are up over 20% despite the ongoing financial uncertainly.

Scott Fynn, senior marketing manager at Select & Protect, said: “With an enhanced proposition launched, the backing of three blue chip underwriters in Norwich Union, Zurich and Allianz and a streamlined application process, we’ve seen new mortgage brokers register at a rate of over 400 each month. We don’t see this slowing down either – with certain GI providers now closely reviewing their front end incentives, coupled with the slow down in mortgage business, brokers are really focussing on the ancillary earning potential of General Insurance and Select & Protect are clearly the forerunners in the market at the moment.

“We believe we’ve struck the perfect balance for a broker GI proposition; great products, generous long term commission and a proposition that has stood the test of time. 25 years of delighting brokers and customers alike with a dedicated specialisation in offering intermediary general insurance, has ensured that we remain the pioneers of GI in this marketplace and not short term goal seekers.”

British insurance launches shared ownership MPPI

British Insurance has launched a new Mortgage Payment Protection Insurance (MPPI) policy for households involved in shared ownership schemes.

It is for people who part-purchase a property to buy a policy that will meet their monthly mortgage and rental payments should accident, sickness or unemployment occur.

Managing director, Simon Burgess, says this product addresses years of discrimination.

He added: “All householders should be able to protect the payments they make and keep their home, whether it’s those with mortgages or those with rent and buy agreements via Housing Associations. Insurers have traditionally offered this financial safety net to people meeting a certain criteria, excluding people on lower incomes in social housing, who are more financially vulnerable.”

The shared ownership scheme is part of a Government programme that aims to help more than 100,000 households into home ownership by 2010. It allows people to have a mortgage on the share of the property they wish to buy, paying rent on the share they don’t own.

According to the National Housing Federation, 70,000 new affordable homes are needed in England each year to meet existing and future requirements and with predictions that the average house price is rising by 25% over the next five years to £274.000, demand for social housing will be even greater.

As the number of shared ownership schemes escalates, so to, says Burgess is the need for insurers to adapt their policies to protect the increasing number of people buying properties this way.

He added: “British Insurance is leading the way in designing comprehensive, affordable products for those who most need them. I hope this will encourage other insurers to follow suit and become more socially responsible – we all have a duty of care to help everyone keep their homes in times of economic uncertainty.”

LVBS fined £840,000 by FSA over PPI

The FSA has fined Liverpool Victoria Banking Services Limited (LVBS) £840,000 for “serious failings” in the sale of single premium Payment Protection Insurance (PPI).

The penalty was imposed for failings in relation to PPI offered to customers who telephoned LVBS seeking unsecured personal loans between 14 January 2005 and 8 August 2007.

In 97 sales calls reviewed, the FSA found over 60% to be non-compliant.

When customers rang LVBS to apply for a personal loan, LVBS added the cost of PPI to the quotation without the customer asking for it. If customers realised they did not have to buy the cover and objected to it, LVBS put pressure on them to take the PPI. When speaking to customers LVBS did not explain that the cost of the single premium PPI was added to the loan and that as a result customers paid additional interest on the PPI premium for the life of the loan. LVBS also provided inadequate information to its telephone customers about the features, exclusions and limitations of PPI and often provided information that was unclear, unfair or misleading.

FSA director of enforcement Margaret Cole said: “When customers phone for a quote, it is totally unacceptable for firms to add on the cost of insurance which the customer has not asked for. Many customers make their decisions when speaking to sales staff. If those conversations are unclear or misleading it will be no defence for firms to say that full details were included in paperwork which customers received later. We have made it abundantly clear that firms must ensure their PPI sales processes are up to the required standards and must change their behaviour where necessary.

“The LVBS sales process was flawed in its design. The firm has stopped all sales of PPI and is now proposing a comprehensive programme to contact its customers and pay them compensation where appropriate. The FSA expects firms to treat customers fairly, particularly when failings have been identified. This proposal for remedial action sets an example for other firms to follow.”

As part of the redress package agreed by LVBS, the interest paid on the PPI premium will be refunded automatically, without the customers having to write to the firm and make a claim. The firm will be writing to its PPI customers asking them to review the terms of their PPI policy and offering to pay full redress where appropriate. LVBS agreed to extend the scope of its redress proposals to include a review of all PPI offered via telephone, internet or post between 14 January 2005 and 31 January 2008. This remedial action has been taken into account by the FSA and has significantly reduced the level of penalty which would otherwise have been imposed on the firm.

In addition, LVBS qualified for a 30% reduction in penalty by settling at an early stage of the FSA’s investigation. Were it not for this discount, the FSA would have sought to impose a financial penalty of £1.2 million.

The FSA has previously fined seven firms over poor PPI selling practices: HFC Bank £1.085 million, Regency Mortgage Corporation Limited £56,000, Loans.co.uk £455,000, Redcats (Brands) Limited £270,000, GE Capital Bank £610,000, Capital One Bank (Europe) Plc £175,000 and Land of Leather £210,000 – and has imposed a public censure on Eastern Western Motor Group Limited and Cathedral Motor Company Limited. Three other cases have been concluded where problems relating to PPI also featured – Capital Mortgage Connections Limited £17,500, Home and County Mortgages Limited £52,500 and Hadenglen Home Finance Plc (£133,000 for the firm and £49,000 for its chief executive).

Life cover continues to get cheaper

Research conducted by Moneyfacts.co.uk has shown that life insurance has reduced by up to 20% in the last five years.

The average premium for a Male non smoker, 30 next birthday, looking for £100K of life cover over a 25 year term now stands at £8.79, compared to £10.99 in July 2003.

With such advances in medical science, people are living much longer than they ever used to. As these policies only cover the insured for a set period of time, the likelihood of them dying in the term is greatly reduced.

It is unlikely that these rates will fall much further but as long as consumers adopt a healthy lifestyle, they are likely to continue to find life insurance at an affordable price.

Assurant Solutions offers protection in Ireland

Assurant Solutions has partnered with the Irish Brokers Association (IBA) in an exclusive deal to develop payment protection products in Ireland.

The products – mortgage payment protection and income protection insurance – have been launched throughout the country under the My Broker brand and are exclusive to IBA members. The short term income protection product is the only one of its kind available in the Irish market currently. Brokers can now offer their customers the option to choose cover depending on their individual circumstances including accident and sickness, accident, sickness and involuntary unemployment or involuntary unemployment only. Critical illness and hospitalisation cover are also available as add-ons.

Robert McCarthy business development manager Assurant Solutions said: “We are excited by this partnership with the Irish Brokers Association and this is a great opportunity for us to expand our offering in Ireland. At Assurant Solutions we don’t believe that one-size fits all: the My Broker products have been designed exclusively for IBA members to ensure that all customers should be able to find the right cover for their individual needs.”

Brian McNelis, director of general services, Irish Brokers Association said: “We’re delighted with the two exclusive insurance products we are able to offer to our members in partnership with Assurant Solutions. Together with a number of IBA members, we have worked closely with Assurant Solutions for several months to tailor these products so they satisfy our customers’ requirements. Assurant Solutions has also provided in-depth training for our brokers to ensure they can effectively answer any queries when offering the My Broker products to their customers.”

ABI research reveals drop in consumer confidence

An ABI survey has revealed a downturn in consumer confidence over the next 12 months, with 82 per cent of respondents saying the worse is yet to come.

The research, carried out by YouGov on behalf of the ABI, surveyed 3,624 adults about the economic climate and their views about its future.

A staggering 92 per cent think that the economic environment is worse now than it was a year ago, while 82 per cent expect the economic environment to worsen over the next 12 months.

The ABI’s director of research and chief economist Rebecca Driver says confidence in the economy is deteriorating rapidly.

According to Driver 61 per cent of people now think the economy is a lot worse than a year ago, compared to 49 per cent in April. Only 5 per cent expect the situation to improve in the next year.

A further 31 per cent of respondents think that they could cope financially with job loss despite 69 per cent saying they would not be willing to take out any protection insurance products in the future.

The ABI’s assistant director of health and protection insurance Nick Kirwan says: “It is worrying that so many people are not prepared to look at taking out protection insurance, even insurance which covers redundancy given the uncertain economic outlook.

“It’s clear that we need to work harder to get the message across about the peace of mind and value that having the right protection insurance gives individuals and families.”

Pink sees increase in insurance policies sold

Almost 70% of intermediaries who responded to Pink Home Loans’ recent survey expect their insurance business to increase this year compared to 2007.

20% thought that they would not see an increase and the remainder were unsure.

Pink has seen close to a 10% increase in the number of insurance policies completed up until May of this year compared to the same period of 2007.

Neil Hoare, associate director of marketing and IT, said: “The findings do not come as a great surprise as intermediaries are having to look at other ways of maintaining their income streams, due to the short fall in mortgage business this year.

“We have been working very closely with our intermediary customers to build on their knowledge of the insurance sector, offering workshops at our Appointed Representative seminars and we are also planning on holding additional training courses at our new head office in Lichfield. The first of which will be held on 24th July. Following that we will be holding an insurance training day every month in Lichfield and ARs of Pink that are interested in attending should speak to their local BDM.”

Emma Green, business partnerships manager, from Paymentshield, said: “The market is tough for brokers at the moment and with the floods of 2007 and increase in repossessions and redundancies now has never been a better time to sell insurance”.

“At Paymentshield we solely provide our insurance products through intermediaries and we are therefore continually looking for ways to help brokers grow their business through selling insurance to their customers. We are delighted with the drive and commitment that Pink has given in encouraging their ARs to fill the gap through selling Buildings and Contents and MPPI. This has clearly paid off for Pink with record insurance sales.”

Friends Provident decides to keep Pantheon

Friends Provident has decided to retain Pantheon Financial to avoid disruption to its business due to speculation over its sale.

The insurer had previously announced its intention to sell the wholly-owned IFA, but it says that despite several expressions of interest it will not be possible to get good value for shareholders from a sale in the short term.

A statement to the stock market today says: “Friends Provident has taken the decision to retain its 100 per cent ownership of Pantheon Financial Limited to avoid disruption of Pantheon Financial’s business due to ongoing speculation on changes of ownership in the near future.

“Despite a number of positive expressions of interest Friends Provident believes it will not be possible in the short term to achieve a sale price that will realise suitable value for shareholders. Therefore it has taken the decision to retain Pantheon Financial.”

There are no further announcements about Lombard and F&C, the other two businesses Friends Provident is looking to offload.