Three former bosses of insurance firm Swinton have been fined a total of £928,000 for running a massive and aggressive mis-selling operation.
The City regulator, the Financial Conduct Authority (FCA), said the former bosses had driven “an aggressive sales strategy” of often unnecessary insurance products to try to share in a £90m bonus pool.
The FCA also banned the men - former chief executive Peter Haplin, former finance director Anthony Clare and former marketing director Nicholas Bowyer – from ever holding any significant positions at any financial services firms.
Tracey McDermott, the FCA director of enforcement and financial crime, 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.”
McDermott said the tough action, which follows a £7.4m fine against the Manchester-based company in 2013, 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 said the men were acting in self-interest as they stood to collect massive bonuses if the firm hit profit targets.
“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 regulator said. “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.”
Haplin was fined £412,700 and banned for life from acting as a chief executive of an FCA-authorised firm “because of his lack of competence in his FCA-approved CEO role”.
The FCA said Haplin “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”.
“Haplin 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,” the regulator said.
Clare was fined £208,600 and banned for life from holding a position of significant influence in an FCA-authorised firm.
“As finance director, Clare was instrumental in the creation and implementation of a business strategy to maximise Swinton’s operating profits in 2011. Clare should have seen the risk that this strategy was leading to a sales-focused culture that acted to the detriment of the fair treatment of customers. Despite his responsibilities, he missed the warning signs,” the FCA said.
Bowyer was fined £306,700 and banned for life from holding a position of significant influence in an FCA-authorised firm. “As marketing director, Bowyer played a central role in the development and launch of the monthly add-on policies and was responsible for their design, development and marketing. He was involved in a number of decisions which were not fair to consumers.”
All three men settled with the FCA early on and therefore qualified for a 30% discount off their fines.
