Insurance broker fined €10,000 for four breaches

SLIGO INSURANCE broker McSharry Foley has been fined €10,000 and reprimanded by the Central Bank for a range of compliance breaches, including overcharging.

The problems at the firm related to the sale of general insurance and emerged when the Central Bank carried out an inspection in April 2009.

In total, the Central Bank found four breaches of its consumer protection code and its Handbook for Authorised Advisers.

In one such violation, the company charged fees to some of its customer policies that were higher than the maximum fees allowed under its terms and conditions.

Over five years between August 2004 and the end of October 2009, these excess fees amounted to €32,578.

McSharry Foley also failed, in the period between August 2004 and the end of 2008, to properly reconcile the amounts it charged its customers and the amounts subsequently paid to insurance companies for their cover.

The Central Bank also found that the firm had in 2008 and for most of 2009 applied charges to rebates that were due to customers without securing agreement from those customers.

It had also failed, between August 2004 and the end of October 2009, to “have and employ effectively the resources and procedures, systems and controls checks” needed to comply with the Central Bank’s Code and Handbook.

In relation to the charging of fees above the maximum outlined in its terms of business, the firm separately disclosed these fees in new business invoices and renewal notices and has since refunded them.

The Central Bank said they represented about 1.6 per cent of the firm’s fee income for the period involved.

It said that in reaching a settlement with McSharry Foley, it had taken into account the firm’s prompt action in rectifying the issues once they had been discovered, its co-operation with the investigation and its financial position.

The agreement also reflected the refunds with interest the firm had made, the Central Bank noted.

Peter Oakes, the Central Bank’s director of enforcement, said regulated companies could expect that the bank would “vigorously follow through facts to their conclusion” when serious regulatory breaches occur.

He said the Central Bank’s enforcement actions should be seen by other such firms as “clear signals” of the kind of behaviour the bank wants to change “in a way that improves standards across the industry”.