The Financial Services Authority (FSA) today banned insurance broker, Harbinder Panesar, from working in the financial services industry and fined him £212,237.
Panesar was the director of South Wales motor breakdown insurance firm, Motorcare Elite (2008) Ltd (Elite). The FSA has cancelled the permission of Elite, meaning it can no longer do authorised business. Elite is currently in liquidation.
An investigation by the FSA revealed that between August 2008 and December 2010 Panesar misappropriated over £180,000 from Elite and another insurance broker he previously ran, Motorcare Warranties Limited (Warranties).
Panesar’s fine also takes account of his reckless operation of Elite. Panesar allowed Elite to:
- sell Panesar’s product, ‘Supreme Plus’, which fundamentally failed to meet customers’ needs;
- sell policies that were outside the scope of cover offered by its underwriters;
- fail to report policies accurately to its underwriters; and
- sell policies after Elite’s deal with an underwriter had ended.
All of these failings meant that over 6,000 customers were left without the motor breakdown insurance cover they had paid for.
Panesar has been recently discharged from bankruptcy, indicating that paying the full financial penalty would cause him serious financial hardship. However, his misconduct is so serious that the FSA will not be reducing the penalty and is prepared to put Panesar into bankruptcy a second time should he be unable to pay.
Tracey McDermott, the FSA’s director of enforcement and financial crime, said:
“Harbinder Panesar has left a trail of destruction behind him: misappropriating funds from his businesses, acting recklessly towards consumers, and taking two firms into liquidation.
“So egregious were his actions that even though he has only recently been discharged from bankruptcy, we will not reduce the fine because of financial hardship. Such dishonesty and recklessness not only posed a risk to consumers, but also to other market participants and to confidence in the financial system as a whole. Panesar is learning the hard way that we will not stand for this kind of activity.”
The FSA published a consumer alert about Elite in June 2011. Customers of Elite who wish to make a complaint should contact the Financial Services Compensation Scheme on 0800 678 1100 or 020 7741 4100.