Ex-Swinton executives fined and banned by FCA

THREE former bosses of Manchester-based insurance company Swinton have been fined and banned by the financial services watchdog.

The Financial Conduct Authority has fined the three – former chief executive Peter Halpin, finance director Anthony Clare and Nicholas Bowyer a total of  £928,000.

Mr Halpin has been banned from running a financial services firm as CEO, while the other two are banned from “performing significant influence functions at financial services firms,” the regulator said.

In a statement Mr Halpin said he sincerely regretted any “detriment suffered by customers” and stressed he had acted in good faith “at all times”.

The FCA’s action follows previous enforcement action taken against Swinton: in 2013 it was fined £7.4m after it adopted an aggressive sales strategy that resulted in mis-sales of monthly add-on insurance policies; and in 2009 the firm was fined £770,000 for failures in its sales of PPI.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “A culture was allowed to develop within Swinton that pushed for high sales and increased profit without regard to the impact on the firm’s customers.

“We expect firms to put customers at the heart of their business. These three directors should have recognised the risk to customers and redressed the balance so that the drive to maximise profits did not jeopardise the fair treatment of customers.

“Those with significant influence within firms are responsible for setting the tone and the culture; they set the example that others will follow. Today’s enforcement action should serve as a timely reminder to those at the very top of firms that the FCA is determined to hold individuals to account where they fall short of the standard we require.”

The FCA has found that a sales-focused culture in Swinton was encouraged by Clare and Bowyer driving a business strategy that was designed to boost the firm’s profits in 2011. The three former directors did not recognise the risk of this culture developing or take reasonable steps to prevent it.

Swinton’s participating directors (including these three directors) stood to gain a bonus of approximately £90m under the directors’ share scheme if operating profits reached £110m in 2011. Halpin, Clare and Bowyer would have benefited significantly under the scheme had these results been achieved.

In December 2011 French parent company Covea dismissed the three along with two others, operations director Jackie Ordish and IT director Adrian Hazeldine, following concerns over performance-related share scheme payments.

Detailing the findings and sanctions, the FCA said Halpin had been fined £412,700 in addition to a ban from acting as a CEO of an FCA authorised firm because of a lack of competence in his FCA approved CEO role.

Its investigation found that Halpin failed to ensure that Swinton’s management information was adequate for the firm to identify compliance issues with the sales of the monthly add-ons and to ensure its customers were being treated fairly.

It also said he failed to respond to warning signals about those sales and, when he did act, his actions did not go far enough.

The watchdog added: “Halpin also failed to recognise the risk that the potentially lucrative incentive scheme for Swinton’s executive directors could give rise to a culture within Swinton that increased the risk of mis-selling.”

Mr Halpin said: “I sincerely regret any possible unintended detriment suffered by customers. I acted in good faith at all times and it is of some significant comfort that the Regulator did not impugn my integrity, nor find that my conduct was improperly motivated by incentive arrangements.” 

After his dismissal from Swinton Anthony Clare joined Manchester law firm Pannone as finance director where he played a key role in its sale to Australian firm Slater & Gordon. He exited soon after the deal completed.