The Financial Services Authority (FSA) has fined an insurance broker £195,117 for insurance fraud and banned him from carrying on regulated financial services.
John Folan was a director and adviser at Key Mortgage Associates, a small mortgage and insurance intermediary in Brentwood, Essex.
The penalty is made up of a £70,000 fine and the disgorgement of £125,117 which Folan obtained through commission.
Between January 2008 and September 2009 Folan submitted at least 54 applications for life assurance and protection policies in his name, his wife's name and in the name of family members.
He made these applications without their knowledge and in three of them he also falsified signatures of family members.
In each case Folan provided his own bank account details so direct debit payments could be taken by the insurance providers.
Ostensibly, Folan aimed to keep up with the premiums, but when his money began to run out he took out further policies to secure more commission to cover the outstanding payments.
Before long however this process of ‘churning' made the providers suspicious and they contacted the FSA.
Folan used his own address as the point of correspondence so that the people he was impersonating would never become suspicious when they received insurance documents out of the blue.
When documentation was occasionally sent to family members he lied to them to conceal his true intent by saying he was submitting ‘sample policies'. Folan destroyed policy documents as soon as he received them so that he kept no audit trail of his wrongdoing.
Tom Spender, head of retail enforcement at the FSA, commented:
"This is a significant fine to reflect significant failings. Folan took advantage of his position as an FSA approved individual for his own personal gain, and at the same time took advantage of his close family. The FSA concluded that he lacks honesty and integrity.
"Folan's actions tarnish the industry's reputation, and that is why we continue to pursue these cases and publish the findings. Anybody working in the industry who is tempted to commit any type of insurance fraud should note the consequences of their actions."