Insurance broker fined over fraud

A SCOTTISH insurance broker has been fined £333,204 and banned from working in regulated financial services after using payments to shore up his firm.

The Financial Services Authority (FSA) imposed the penalty on Donald McKee Morgan for committing insurance fraud by withholding payments to his broker network from his Prestwick-based firm Donald Morgan Insurance Services (DMIS).

The FSA said Morgan falsified monthly reports and manipulated the computer systems at DMIS to conceal the missing payments, which he used to pay staff salaries and fund his lifestyle.

Morgan himself informed the FSA of his misconduct in August 2010 after realising the financial situation at DMIS was not going to improve and he was not going to be able to repay the money he had misappropriated. He co-operated fully with the FSA throughout its subsequent investigation.

His wife, Janet Morgan, who was the only other partner at DMIS, was censured and banned from carrying out regulated financial services. She took no active part in the affairs of the firm, and failed to notice her husband’s fraudulent activity.

Tom Spender, the FSA’s head of retail enforcement, said: “Donald Morgan abused his position as an approved person and also abused the trust placed in him by his clients and business partners. Fortunately, his clients were never left uninsured, but his actions were unacceptable.”