FSA bans director for losing clients’ cash

THE Financial Services Authority (FSA) has banned the director of a Manchester-based mortgage and insurance firm from holding senior positions in the financial services industry after he lost £85,000 of his clients’ money.

Matthew Sixsmith was the director of Bridgewater House UK, which dealt mainly in the sub-prime mortgage market, but also arranged life and critical illness insurance.

The FSA said he breached client money rules by failing to separate his company’s cash from insurance premiums paid upfront by customers.

As a result, when the firm ceased trading in September last year, around £85,000 of customers’ money was missing.

As Bridgewater’s sole director, the FSA said it was Sixsmith’s responsibility to ensure that any insurance premiums that customers had lodged with the firm were passed on to the insurers when payments became due.

However, some 700 policies lapsed because, until May 2008, Sixsmith kept no record of when these payments should begin or end for each of the firm’s customers and therefore he failed to ensure that premiums were paid when due. 

The FSA said Sixsmith failed to take reasonable steps to ensure his business complied with the its regulations. He also failed to ensure that adequate systems and controls were in place to safeguard client money.

Margaret Cole, director of enforcement at the FSA, said: “Sixsmith was incompetent and his actions posed serious risks to customers who trusted him with their money and expected him to pass that money on to insurers. 

“Individuals who look after client money must act in accordance with the rules. Where they fail to comply, we will not hesitate to take enforcement action against them.”

The FSA would have imposed a penalty of £25,000, but it said this would have placed Sixsmith in serious financial hardship.