FCA fines and bans senior Swinton management figures over sales culture failings

Out-Law News | 10 Nov 2014 | 12:48 pm | 1 min. read

The former chief executive, finance director and marketing director at a UK insurance provider have been served with fines by the Financial Conduct Authority (FCA) and banned from taking senior positions at other financial services companies in the future.

In July last year, the FCA fined Swinton over £7 million for its "aggressive" mis-selling of monthly add-on insurance policies to telephone customers. The insurer "failed its customers" by not providing enough information about the key terms of its policies, and did not properly monitor its sales calls, the FCA said at the time.

The FCA has now taken action against three senior directors it holds responsible for the sales culture that existed at the company.

The regulator said Peter Halpin, Anthony Clare and Nicholas Bowyer were responsible for a culture within Swinton that encouraged staff to push for higher sales and profits without "regard to the impact on the firm’s customers". It said the trio should have "recognised the risk to customers" of the sales and profits culture and "redressed the balance so that the drive to maximise profits did not jeopardise the fair treatment of customers".

The FCA fined Halpin, Swinton's former chief executive, £412,700. It also banned him from holding a chief executive role at any financial services business in future. Clare, the former finance director, was fined £208,600 and Bowyer, Swinton's former marketing director, £306,700 for their part in sales culture failings at Swinton. Both were also banned from "performing significant influence functions" in the financial services sector in future.

"A sales-focused culture in Swinton was encouraged by Clare and Bowyer driving a business strategy that was designed to boost the firm’s profits in 2011," the FCA said. "The three former directors did not recognise the risk of this culture developing or take reasonable steps to prevent it."

The regulator said that Swinton's directors, including Halpin, Clare and Bowyer, stood to gain a share of approximately £90 million in bonuses if the company achieved operating profits of £110m in 2011.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: "Those with significant influence within firms are responsible for setting the tone and the culture; they set the example that others will follow. [This] enforcement action should serve as a timely reminder to those at the very top of firms that the FCA is determined to hold individuals to account where they fall short of the standard we require."