| Link(s): | Director fined £1.1m and banned for misusing funds due to insurers | FCA Final Notice 2024: Leigh Mackey |
Context
The FCA has published a press release and a Final Notice outlining action taken against Leigh Mackey, former Director of Inspire Insurance Services Ltd (“Inspire”). Inspire was placed into liquidation by Mr Mackey on 6th November 2020 (following intervention action by the FCA) and remains in liquidation as of the date of this Final Notice. The FCA has banned Mr Mackey from working in financial services and fined him £1.1m for misleading the FCA and misusing funds due to insurers. Between 12th September 2011 and 8th December 2019, Mr Mackey had sole management control of Inspire, an insurance broker for the construction sector.
Key points to note and next actions
The FCA believes that Mr Mackey is not a fit and proper person as he lacks honesty and integrity and poses a risk to consumers and to the integrity of the UK financial system. The Authority has made an order prohibiting Mr Mackey from performing any function in relation to any regulated activities carried on or by any authorised or exempt person or exempt professional firm.
- Mr Mackey used funds due to insurers to support Inspire’s operating costs and to pay for personal living expenses (such as employee wages and expensive company cars, and Mr Mackey’s remuneration) via payments from Inspire’s holding company (which received dividends from Inspire paid using premiums) and direct money transfers from Inspire’s bank accounts.
- In addition, a large number of other fund transfers were made by Inspire to Mr Mackey, or for Mr Mackey’s benefit (sometimes directly and sometimes via Inspire’s holding company), which were only made possible by Mr Mackey’s use of insurer premiums to artificially enhance the revenue of Inspire.
- Mr Mackey referred to this practice as the taking of ‘advance commission’, and he admitted to the FCA that the practice (i.e. taking funds from net monies due to insurers) took place over a period of several years. Mr Mackey has also admitted to the FCA that he was aware for three years that there was a shortfall in funds due to insurers and that this shortfall constituted a significant amount.
- By his own admission, Mr Mackey accepts that, due to his actions, Inspire owes insurers over £660,000. Estimates by Inspire’s liquidator are significantly higher, suggesting a shortfall of over £2.2m.
- Mr Mackey was not truthful with the FCA. Inspire submitted regulatory reports over 4 years stating it had carried out required client asset audits. Mr Mackey admits it failed to carry these out.