Broker disqualified from managing regulated business
Tallaght insurance firm took €121,250 from client accounts over 27 months
The Central Bank, which yesterday announced penalties against a Tallaght-based insurance broker.
Broker Raymond Smyth has been disqualified from managing any regulated provider of financial services for three years under the term of a settlement with the Central Bank
The bank also reprimanded Smyths Insurance Brokers Limited and fined it €12,000.
The penalties relate to breaches of the consumer protection code, in which the firm debited a total of €121,250 from client premium accounts over a 27-month period from mid-2008 to September 2010, transferring the money to the account of a separate company and to the broker’s office current account. In both cases the funds were used to discharge debts of the companies concerned.
The case came to light when the regulator arrived to inspect the broker, based at the Village Square, in Tallaght, in October 2010. Mr Smyth, who informed the inspector of the firm’s actions, repaid the amounts to the client premium account the day before the inspection.
The firm also failed to carry out or retain monthly reconciliations on each client premium account over a period in excess of four years from August 2006.
Explaining its penalties, the bank cited the duration and frequency of the breaches and the fact that the firm benefitted financially from the breaches. “The wrongful transfers from the client premium account were akin to interest free credit,” it said.
“The taking of this case and the sanctions imposed reflect the seriousness with which the Central Bank views the wrongful use of client funds, in this case, monies in the client premium account,” the bank said in a statement.
Director of enforcement Derville Rowland said: “Client money and client premium protections are critical to consumer confidence. We are conscious of the current difficult trading environment for firms and are cognisant that there may be increased temptation to look to client money or premiums as a way to improve cash flow difficulties.
“Firms should be in no doubt that the Central Bank will not tolerate misuse of client money or premium in any circumstances and, where breaches are identified, the most serious sanctions will follow.”
The bank said no client or insurance company had suffered any loss as a result of the breaches. and that the matter was now closed.