Insurance firm and CEO fined more than £1m after failing to protect client money

The FCA has fined Radford, who is also the owner of Mansfield Town Football Club, £468,600 and prohibited him from having any responsibility for client money and/or insurer money in relation to regulated activity in financial services. The FCA said: “In the FCA’s view, One Call failed to arrange adequate protection for its client money, breaching Principle 10 of the FCA’s Principles for Businesses and the Client Money Rules.

The decision notice states that between January 2005 and September 2014, One Call received money, in the course of its activities as an insurance intermediary, which was client money under the Client Money Rules. The FCA added: “One Call was therefore required to ensure it protected that client money, by complying with these requirements. In the FCA’s view, it failed to do so because firstly, it failed to appreciate that certain Terms of Business Agreements it wrote business under did not provide effective risk transfer and failed to operate its client money account in accordance with the Client Money Rules.

“Secondly, from 1 December 2009, One Call failed to treat funds advanced by a third party premium finance provider in respect of years two and three of an annual motor policy with a subsequent two-year renewal price guarantee as client money.

“As a result, One Call inadvertently spent client money, resulting in a substantial client money deficit of £17.3 million, (which it has subsequently repaid) and exposing customers to a significant risk of loss.”

Radford was responsible for client money at One Call between January 2005 and September 2011 and personally responsible for ensuring One Call complied with regulatory requirements in this context, said the FCA. He was also the chief executive and a director of One Call.

The FCA also said it believed Radford failed to ensure that One Call established robust systems and controls for assessing whether effective risk transfer agreements with insurers were in place so that if any client money shortfalls arose as a result of One Call’s failure, insurers rather than customers would bear this risk.

The authority added: “This meant he failed to identify that One Call had placed a small volume of insurance business under agreements which did not provide for effective risk transfer and the money in question should therefore have been treated as client money.”

One Insurance Ltd, a connected company, has challenged the decisions in the Upper Tribunal, which may result in amendments.

Both One Call and Radford have agreed to settle at an early stage of the investigation and therefore qualified for a 30% discount. Were it not for this discount, the FCA would have decided to impose a fine of £977,147 and a restriction for a period of 182 days on One Call and a fine of £669,531 on Radford.

A One Call spokesman said: “In early 2014, One Call Insurance Services and John Radford realised that they had made an error in the client money calculation and immediately reported it to the FCA. The client money deficit was then rectified. Both One Call Insurance and John Radford express regret for this miscalculation. Their intention, as always, was to help consumers achieve the best possible price in an increasingly competitive motor insurance market.

“A section 166 notice was issued to One Call Insurance Services by the FCA and recommendations were made which included strengthening its board of directors. One Call Insurance Services immediately put any recommendations into place. Subsequently a skilled persons report was carried out by Deloitte and the section 166 was concluded and closed in June 2015. No additional action has been taken by the FCA since that date.

“In the decision Notice, it is acknowledged that “One Call Insurance has invested heavily in additional management and its systems and controls… there has been widespread improvements in the firms Governance Framework and finance function.”

The spokesman added that One Call Insurance Services accepted its mistake four years ago, implemented changes and resolved this matter with the FCA at the earliest opportunity. “There has been no suggestion of any dishonesty and it is accepted that the mistakes were genuine,” they said.

The spokesperson added: “One Call Insurance Services accepts the fine and restrictions imposed. One Call Insurance Services have been aware of the financial penalty for some time and have made financial provisions within forecasts.

“The FCA suggest that John Radford cease to be responsible for Client Money, a responsibility he had already relinquished in 2011 due to the growth of One Call Insurance and his other business interests.  Therefore John Radford has agreed with the FCA’s recommendation.”