Watchdog hands fine and ban to director of failed insurance firm

The sole director of a failed Devon insurance firm has been fined and banned from working in the financial services industry for “dishonest and reckless conduct”.

It comes after Perry Prowse (Insurance Consultants) Ltd (PPICL) entered liquidation in January 2020 – four months after the Financial Conduct Authority (FCA) removed the company’s permissions to broker insurance contracts.

The financial watchdog said that between 7 November 2017 and 24 October 2019, Martin Sarl failed to pass clients’ premiums to insurers, meaning that some customers were left uninsured without their knowledge.

The FCA’s investigation uncovered that Sarl used money from the firm’s client account to pay both his personal debt, and that of the firm.

That was not allowed under the FCA’s Client Money rules, and these funds should have been kept separate.

As a result, there was not enough money to transfer the premiums – that his customers had paid to him – to insurers, leaving customers without cover and at risk of having their home, and car insurance claims rejected.

When he was asked questions by customers about their insurance, Sarl hid the truth, even going as far as blaming a false ‘IT glitch’. In at least one instance, a customer had a claim rejected because they did not have cover in place.

Sarl was fined £5,021, a penalty which was reduced from £63,600 as he provided evidence that the payment of £63,600 would cause him serious financial hardship.

The FCA said: “The penalty was reduced to £5,021 as this is the amount that Authority considers was the financial benefit derived directly from his breaches and it would not be appropriate to allow him to retain this benefit.”

Therese Chambers, joint head of enforcement and market oversight at the FCA, said: “Mr Sarl’s customers trusted him to keep their money safe and to secure the insurance cover they needed. Instead he helped himself to prop up his business and personal finances. He compounded this by lying to his customers.

“This left many people at risk of being unable to make a claim should they have needed to. It is right that Mr Sarl should be banned from the industry.”