FSA bans three over £2m insurance fraud

Three men have been banned from working in financial services for swindling £2m out of a trio of London-based insurance firms.

The FSA has banned Timothy Higgins, Clifford Felstead and Ralph Brunswick for a scheme which defrauded Markel International Insurance Company, QBE Insurance and Amalfi Underwriting between 2005 and 2007.

Higgins was a director and founder of Surety Guarantee Consultants (SGC), a firm established in 2005 to write surety bonds. Felstead was an employee of SGC in a management role.

SGC held binding authorities with London market insurers, Markel and QBE, through Amalfi, to issue surety bonds.

The FSA found SGC wrote business that exceeded its authorised limits, exposing Markel and QBE to greater liabilities than they had agreed. In doing so, SGC made secret profits and withheld over £2m that should have been paid to the insurers.

When SGC was audited by the insurers it produced false documents intended to show that it had kept within the terms of the binding authorities.

It was aided by Brunswick, who provided false documents in the name of a company located in the Isle of Man, where he was employed at the time.

SGC also lied to QBE about a previous conviction Felstead had for fraud. When QBE was informed that an SGC employee had a conviction, it was told by SGC that Felstead would be leaving the company with immediate effect. Instead Felstead continued to be involved in SGC's surety bond business.

Margaret Cole, FSA director of enforcement and financial crime, says: "The London market relies on the trust and integrity of those who work in it. All three of these men fell woefully short of the standards expected of them.

"They abused the trust and confidence placed in them by leading London market insurers in order to make a profit for themselves."

The FSA adds Higgins would also have been fined £600,000 were it not for the fact that he had recently been made bankrupt.