Context
The FCA has banned Martin Sarl from working in the financial services industry and fined him £5,021 for acting without honesty and integrity. Had it not been for his serious financial hardship, the FCA would have imposed a financial penalty of £63,600 (or £46,000 adjusted for a 30% discount if settled early).
Between 7 November 2017 and 24 October 2019, Mr Sarl, who was the sole director at Perry Prowse (Insurance Consultants) Ltd (Perry Prowse), failed to pass clients’ premiums to insurers, meaning that some customers were left uninsured without their knowledge.
Key points to note and next actions
- The FCA’s investigation uncovered that Mr Sarl used money from the firm’s client account to pay both his personal debt, and that of the firm. That was not allowed under the FCA’s Client Money rules, and these funds should have been kept separate. The Client Money Rules require firms to calculate the amount of client money that should be segregated in a separate client bank account. Firms must segregate the client money until the premium is either paid to the insurer or client money is paid out to a client.
- Firms must always hold the right amount of client money in a segregated client bank account to avoid a shortfall occurring. The FCA continues to take failures to segregate appropriately seriously.
- The failings at Perry Prowse were highlighted in September and November 2019 in the FCA’s first and second Supervisory Notices, with the business entering liquidation in January 2020.