F41\

FINANCIAL
CONDUCT
AUTHORITY

12 Endeavour Square
London
E20 1JN

TeL
+44 (0)20 7066 1000
Fax:
+44 (0)20 7066 1099
wwwfcaorguk

FIRST SUPERVISORY NOTICE

To:
Triton Insurance Brokers Ltd (the “Firm”)

Address:
346 Seawall Lane
North Cotes
Grimsby
South Humberside
DN365XE

ACTION

1.
For the reasons given below and pursuant to section 55J(1)(c)(i) of the Financial
Services and Markets Act 2000 (the Act), the Authority has decided to vary the
permission granted to the Firm pursuant to Part 4A of the Act, by removing all
regulated
activities
with
immediate
effect.
Accordingly,
the
Firm’s
Part
4A
permission no longer includes the following regulated activities:

a)
advising on investments (excluding Pension Transfers and Pension Opt-Outs);

b)
advising on P2P agreements;

c)
agreeing to carry on a regulated activity;

d)
arranging(bringing about) deals in investments;

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:

e)
assisting in the administration and performance of a contract of insurance;
and

f)
making arrangements with a view to transactions in investments.

2.
The
Authority
has
further
decided
to
impose
on
the
Firm
the
following
requirements, pursuant to section 55L(2)(c) of the Act:

a) The Firm must, within three working days of the date of receiving this First
Supervisory Notice (namely by close of business on Thursday 20 February
2020):

i.
update the Website with a prominent statement that the Firm
no
longer has permission to conduct any regulated activities;

ii.
notify its customers in writing that the Firm no longer has permission
to conduct any regulated activities;

iii.
notify the Authority in writing that it has complied with paragraph
2(a)(i),
by
providing
screenshots
of the
amended
pages
of the
Website,
and
paragraph 2(a)(ii),
by
providing
a template written
communication and a list of the clients/addresses/email addresses to
whom it was sent.

The wording and formatof the announcement and written communication are to
be approved by the Authority prior to being placed on the Website or sent.

b) The Firm must, within 21 days of receiving this First Supervisory Notice
(namely by close of business on Monday 9 March 2020), provide the Authority
with the following information:

i.
a detailed statement of all insurance policies brokered by the Firm,
for the period from 31 January 2019 to date, including name and
address of each policy holder, date of inception of the policy, policy
type (including the underwriter and any brokers the policy was placed
through) and total premium paid.

c)
The Firm must, within 21 days of receiving this First Supervisory Notice
(namely by close of business on Monday 9 March 2020):

.
i.
refund the insurance premiums paid by its clients, which the Firm
have
not
paid
to
the
insurance
firms
referred
to
in
this
First

.
Supervisory Notice; and

ii.
notify the Authority in writing that it has complied with paragraph
2(c)(i), and provide payment confirmation receipts.

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REASONS FOR ACTION

3.
on the basis of the facts and matters described below, the Authority considers
that the variation of the Firm’s permission and the imposition of the requirements
is desirable in order to advance its consumer protection objective.

4.
The Authority has serious concerns arising from the fact that the Firm appears to
have:

a)
Purported to renew the insurance policies of at least 19 of its customers in
circumstances where it was not permitted or able to do so;

b)
Received insurance premiums from its customers totalling £10,864.21, but
has exposed customers to harm and the risk of harm by not passing on
those insurance premiums to the relevant insurers, thereby leaving at least
20 customers without a valid insurance policy in circumstances where they
thought they were insured;

c)
Repeatedly failed to respond to the Authority’s communications, thereby
failing to engage with the Authority in relation to these matters of significant
concern and failing to meet its obligations under Principle 11 (Relations with
regulators) of the Authority’s Principles for Businesses.

DEFINITIONS

5. The definitions below are used in this First Supervisory Notice:

a)
“the Act” means the Financial Services and Markets Act 2000;

b)
“the Authority” means the body corporate previously known as the Financial
Services Authority and renamed on
1 April 2013 as the Financial Conduct
Authority;

c)
“the Firm” means Triton Insurance Brokers Ltd;

d)
“EG” means the Authority’s Enforcement Guide;

e)
“Insurance Firm A” means an insurance and underwriting agency;

f)
“Insurance Firm B” means an insurance firm;

g)
“Insurance Firm C” means an insurance firm;

h)
“RDC” means the Regulatory Decisions Committee of the Authority (see
further under Procedural Matters below);

i)
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber); and

j)
“the Website” means the website www.tritoninsurance.co.uk.

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FACTS AND MATTERS
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Background
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6.
The Firm has been authorised by the Authority since 1 October 2008. The Firm
holds the permissions set out in paragraph 1 to enable it to conduct business in
relation
to
non-investment
insurance
contracts
for
commercial
and
retail
customers. The Firm does not have permission to hold client money.

7.
On the Website, the Firm advertises that it provides and manages the insurance
requirements of most types of businesses and households throughout the UK.
The Firm also offers independent advice in relation to insurance arrangements
covering
commercial
and
industrial
property,
household
and other types of
insurance policies.

The Firm’s business arrangements with Insurance Firm A

8.
The Firm had an agency agreement with Insurance Firm A to broker household
insurance
contracts
on
behalf of Insurance
Firm
A.
This
agreement
was
terminated on 31 January 2019. This meant that, as of 31 January 2019, the Firm
was no longer able to issue new policies or renew the polices of Insurance Firm A
thereafter and was not entitled to hold itself out as being able to introduce
business to Insurance Firm A.

9.
On 2 October 2019, the Authority became aware that the Firm appeared to have
been purporting to renew policies with Insurance Firm A held by its customers. In
doing so, the Firm had sent out what ostensibly appeared to be Insurance Firm A-
branded policy documents to its customers, despite the termination of the agency
agreement on 31 January 2019 and without the knowledge of or prior consent
from Insurance Firm A.

10. In fact, at least 19 customers of the Firm received what appeared to be Insurance
Firm A-branded
policy documents from the
Firm after 31 January 2019
in
purported renewal of their policies and paid premiums to the Firm in respect of
those policies thereafter. On the basis of the Authority’s review of the Firm’s
banking
records,
the
Authority
has
ascertained
that those customers
paid
premiums totalling £9,650.34 to the Firm under the misapprehension that their
insurance
policies
had
been
renewed
in
circumstances where,
in
fact, the
customers had no live insurance contract with Insurance Firm A. The Authority
has also ascertained that these premiums were not paid on to Insurance Firm A
or, in so far as the Authority’s enquiries can establish, another insurer. Rather,
the premium payments were retained by the Firm and an analysis of the Firm’s
banking records indicates that the premium payments were used to pay for
personal expenses.

11.The Authority contacted the Firm on 4 October 2019 seeking an explanation as to
the circumstances in which the purported Insurance Firm A-branded documents
had been issued. The Firm explained to the Authority on that date, and in a
subsequent email dated 16 October 2019, that this had occurred due to an
administrative error and that, as a result, it did not realize that it had received
the payments in question. The Firm also stated that this issue had affected

around 22 customers and that it would remediate them within 8 weeks.

12. However, the Authority has been unabIe to verily these assertions by the Firm
because the Authority has had no lurther response lrom the Firm since
16
October 2019, notwithstanding repeated attempts by the Authority to contact the
Fi rm

13. 01 additional concern, on 12 December 2019, Insurance Firm A inlormed the
Authority that it had received two claims in relation to home insurance policies
brokered by the Firm which were not valid. The policies in question were not valid
on the basis that (a) one was purportedly renewed alter the termination ol the
Firm’s agency agreement with Insurance Firm A and the Firm did not declare this
renewal and/or pass on the insurance premium received Irom the customer in
respect ol it to Insurance Firm A; (b) the other was purportedly renewed prior to
the termination ol the agency agreement but, nonetheless, the Firm did not
declare this renewal and/or pass on the insurance premium received Irom the
customer in respect ol it to Insurance Firm A; and (c) the properties in question
were not eligible to be covered by Insurance Firm A due to a Ilood damage
exclusion relating to the location ol the properties. The result ol this was that the
customers
in question
did
not
in lact have
a
live insurance contract with
Insurance
Firm
A and,
in
any event, the
Firm was
not authorised
by
its
underwriting agency agreement to issue insurance contracts to property owners
within these postcodes.
Thus the Firm had put its customers at risk ol very
signilicant linancial detriment as a result ol not having a valid home insurance
policy. In this regard, Insurance Firm A’s reserve br the claims relating to these
two customers’ claims are £72,820 and £89,750 respectively.

The Firm’s business arrangements with Insurance Firm B

14. Insurance Firm B has had a Terms ol Business Agreement with the Firm since 18
October 2016. This allowed the Firm to engage with retail customers to place
insurance business with Insurance Firm B, which Insurance Firm B then brokered
with a panel ol insurers.

15. On 30 September 2019, a customer ol the Firm (Customer A) contacted the
Authority in relation to the Firm.
Customer A had paid a premium ol £1,213.87
to the Firm on 25 February 2019 br a policy to be placed with Insurance Firm B.
Insurance Firm B conlirmed to the Authority on 6 January 2020 that this policy
was set up on 19 February 2019 but was subsequently cancelled due to non-
payment ol premium on 1 May 2019.

16.TheAuthority has ascertained Irom an analysis ol the Firm’s banking records that
Customer A’s premium payment ol £1,213.87 was received
into the
Firm’s
payment and claim account on 25 February 2019, but there is no evidence that
the premium was either paid on to Insurance Firm B or returned to Customer A.

17. Since 31 May 2019, the Authority has received 22 complaints about the Firm Irom
customers who believed they had a valid insurance policy in place and had paid
their premiums to the Firm. None ol these customers’ premiums appear to have
been paid on to an insurer. 01 these consumers:

i.
16 stated that their underwriter was Insurance Firm A and
1 consumer
specilied their underwriter was Insurance Firm
B (br a
policy issued
through Insurance Firm C).
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ii.
Many stated that theythad paid premiums to the Firm of which 11 of these
customers provided specific amounts, which in total amounted to in excess

.
ofE5,000.

Two provided evidence of their communications with the Firm.

iv.
Four provided evidence of policies purportedly sold to them and policy
schedules onInsurance Firm A-branded documentation that were issued
after 31 January 2019 (the latest dated 12 September 2019).

V.
One provided evidence of transmission of the payment of premiums to the
Firm.

The Firm’s failure to engage with the Authority

18.The Authority was last able to make contact with the Firm on 16 October 2019
and has been unable to contact it since. Thereafter, the Authority tried to contact
the Firm without success on the following dates:

a)
On 30 October 2019 by telephone;
.

b)
On 2 December 2019 by telephone;
.

c)
On 30 December 2019 by telephone;
‘

d)
On 10 January 2020 by telephone;

e)
On 22 January 2020 by telephone and email;
:)
On 24 January 2020 by telephone and email.
,

19.As a result of the Firm’s failure to respond to the Authority’s communications in
contravention of its obligations under Principle 11 of the Authority’s Principles for
Businesses, the Authority has been unable to engage with the Firm in relation to
the matters of significant concern described above. In particular, the Authority
has not had an opportunity to test the veracity of such explanations as the Firm
has provided and it does not know how many policies arranged by the Firm are
valid or otherwise, nor how many of the Firm’s customers may be affected by its
conduct.

20. Likewise, the Authority has not been able to confirm whether the Firm has taken
the remediation action which it referred to on 4 October 2019. The Authority’s
analysis of the Firm’s banking records indicates that the Firm has only provided
redress to a small minority of those customers who have confirmed to the
Authority that they have paid premiums to the Firm in respect of purported
policies with Insurance Firm A.

FAILINGS AND RISKS TO OPERATIONAL OBJECTIVE

21.The regulatory provisions relevant to this First Supervisory Notice are set out in
theAnnex.

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22. From the facts and matters described above, the Authority considers that it is
desirable to exercise the powers under section 55](1)(c)(i) and section 55L(2)(c)
of the Act in order to advance its consumer protection objective. This is on the
basis that the Firm appears to have purported to renew insurance policies for its
customers in circumstances where it was not able to do so and has failed to pass
on insurance premiums to insurers, thus exposing its customers to a risk of
financial loss by leaving them without a valid insurance policy. The Authority also
has evidence to suggest that premium payments have been misapplied in relation
to personal expenditure.
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23. In addition, the Authority has serious concerns regarding the Firm’s conduct on
the basis that:

a)
the Authority has not been able to verify or develop such limited explanations
as the Firm has provided as to why it has received premium payments from
customers but appears to have failed to arrange the corresponding insurance
contracts;

b)
two customers have suffered damage to their properties caused by flooding.
As a result of this event and not having a valid insurance policy in place,
there is a risk that these customers may incur a substantial financial loss;
and

c)
the Firm has not been responsive to the Authority’s repeated attempts to
contact it.

24. Without action to (a) vary the Firm’s permission so that it may not carry on
regulated activities, and (b) require the Firm to state on its Website and notify its
clients that it is not permitted to carry on regulated activities, there is a risk that
the Firm will continue to expose consumers to harm (in the form of misapplied
insurance premiums) and the risk of harm (in the form of financial loss which
may result from not having a valid insurance policy in place).

25.The Authority therefore considers that taking this action with immediate effect is
appropriate and proportionate in furtherance of its consumer protection objective.

PROCEDURAL MATTERS

26.This First Supervisory Notice is given to the Firm under section 55Y(4) and in
accordance with section 55Y(5) of the Act and is being served on the Firm at its
place of business as last notified to the Authority.

27.The following paragraphs are important.

Decision Maker

28.The decision which gave rise to the obligation to give this First Supervisory Notice
was taken by the Chair of the RDC.
The RDC is a committee of the Authority

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which takes certain decisions on behalf of the Authority. The members of the RDC
are separate to the Authority staff involved
in conducting investigations and
recommending action against firms and individuals. Further information about the
RDC can be found on the Authority’s website:

https ://www.fca . org . u k/a bout/com mittees/regulatory-decisions-comm ittee- rdc

29.The Firm has the right to refer the matter to which this First Supervisory Notice
relates to the Upper Tribunal. The Tax and Chancery Chamber is the part of the

,
Upper Tribunal
which,
amongst other things,
hears
references arising
from
decisions of the Authority. Under paragraph 2(2) of Schedule 3 of the Tribunal

‘
Procedure (Upper Tribunal) Rules 2008, the Firm has 28 days from the date on
which this First Supervisory Notice is given to it to refer the matter to the Upper
Tribunal.

30.A reference to the Tribunal can be made by way of a signed reference notice
(Form FrC3) and filed with a copy of this First Supervisory Notice. The Tribunal’s
contact details are: The Upper Tribunal, Tax and Chancery Chamber, 5th Floor, 7
Rolls Buildings, Fetter Lane, London
EC4A
1NL (telephone:
020 7612 9730;
email: uttchmcts.gsi.gov.uk).

31. For further information on the Upper Tribunal (including the power to vary time
periods) reference should be made to the HM Courts and Tribunal Service website
which provides guidance and the relevant form to complete. The relevant page on
HM Courts and Tribunal Service website can be accessed via the following link:

http : //www .j ustice .gov. u k/forms/hmcts/tax-and-chancery-upper-tribunal

32.A copy of Form FTC3 must also be sent to
James Alleyne at the Authority, 12,
Endeavour Square, London, E20 1JN at the same time as filing a reference with
the Upper Tribunal.

Representations

33.The Firm has the right to make written and oral representations to the Authority
(whether or not it refers this matter to the Tribunal). The deadline for notifying
the Authority that the Firm wishes to make oral representations and for providing
written representations is 4 March 2020 or such later date as may be permitted
by the Authority. The address for doing so is:

Jack Williams
Decision-Making Committees Secretariat
Financial Conduct Authority
12 Endeavour Square
London
E20 1JN

Confidentiality and Publicity

34. The Firm should note that section 391 of the Act requires the Authority, when
this First Supervisory Notice takes effect (and this First Supervisory Notice takes
immediate effect), to publish such information about the matter as it considers
appropriate.

35The Firm should note that this First Supervisory Notice may contain confidential
information and should not be disclosed to a third party (except for the purpose
of obtaining advice on its contents).

Contacts

36. For more information concerning this matter generally, the Firm should contact
Arzoo
Azizi
at
the
Authority
(direct
line:
020
7066
3512
I
email:
Arzoo.Azizi@fca.org.uk).

37. If the Firm has any questions regarding the procedures of the RDC, it should
contact
Jack
Williams
(direct
line:
020
7066
1610
I
email:
Jack.Williams@fca.org . u k).

Mark Roberts, Manager, Decision-Making Committees Secretariat, on behalf of

Tim Parkes
Chair, Regulatory Decisions Committee

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ANNEX

RELEVANTSTATUTORYPROVISIONS

1.
The Authority’s operational objectives established in section lB of the Act include
the consumer protection objective. Section 1C(1) of the Act provides that the
consumer protection objective is “securing an appropriate degree of protection for
consumers”.

2.
Section 55J of the Act allows the Authority to vary or cancelthe permission of an
authorised person to carry on
a regulated activity if (among other things)
it
appears to the Authority that it is desirable to exercise the power in order to
advance
one
or
more
of
the
Authority’s
operational
objectives
(section
55J(1)(c)(i)). The permission may be varied by removing a regulated activity or
regulated activities from those to which the permission relates. This power is
referred to as the Authority’s “own-initiative variation power”.

3.
Section 55L of the Act allows the Authority to impose a new requirement on an
authorised person or to vary a previous requirement, if (among other things) it
appears to the Authority that it is desirable to exercise the power in order to
advance one or more of the Authority’s operational objectives (section 55L(2)(c)).
This power is referred to as the Authority’s own-initiative requirement power.

4.
Section 55N of the Act allows a requirement to be imposed under section 55L of
the Act so as to require the person concerned to take or to refrain from taking
specified action (section 55N(1)).

5.
Section 55Y of the Act allows the Authority’s own-initiative variation power or its
own initiative requirement power to take effect immediately (or on a specified
date) only if the Authority, having regard to the ground on which it is exercising its
own-initiative variation power or its own initiative requirement power, reasonably
considers that it is necessary for the variation, or the imposition or variation of the
requirement to take effect immediately (or on that date).

6.
Section 391 of the Act provides that:

a.
When a supervisory notice takes effect, the Authority must publish such
information about the matter to which the notice relates as it considers
appropriate.

b.
The Authority may not publish information under this section
if,
in its
opinion, publication of the information would be (a) unfair to the person
with respect to whom the action was taken or proposed to be taken or (b)
prejudicial to the interests of consumers.

c.
Information is to be published under this section in such manner as the
Authority considers appropriate.

RELEVANT HANDBOOK PROVISIONS

7.
The Authority’s policy
in relation to its enforcement powers is set out in the

‘
Enforcement Guide (EG), certain provisions of which are summarised below.

Imposing requirements on the Authority’s own-initiative

8.
EG 8.2.1 provides that the Authority will have regard to its statutory objectives
and the range of regulatory tools that are available to it, when it considers how it
should deal with a concern about a firm. The Authority will also have regard to: (1)
the responsibilities of a firm’s management to deal with concerns about the firm or
about the way its business is being or has been run; and (2) the principle that a
restriction
imposed
on
a
firm should
be proportionate to the objectives the
Authority is seeking to achieve.

9.
EG 8.2.3 provides that the Authority may exercise its formal powers under section
55J or 55L of the Act, where the Authority considers it is appropriate to ensure a
firm meets its regulatory requirements.

Use of the own-initiative powers in urgent cases

10.
EG 8.3.1 states that the Authority may impose a variation of permission or a
requirement so that it takes effect immediately or on
a specified date
if it
reasonably considers it necessary for the variation or requirement to take effect
immediately (or on the date specified), having regard to the ground on which it is
exercising its own-initiative powers.

11.
EG 8.3.2 provides that the circumstances in which the Authority will consider
exercising its own initiative power as a matter of urgency, include where the
information available to it indicates serious concerns about the firm or its business
that need to be addressed immediately (EG 8.3.2(1)).

12.
EG 8.3.3 sets outs out a non-exhaustive list of situations in which the Authority will
consider in exercising its own-initiative power as a matter of urgency. EG 8.3.3(1)
suggests that the Authority may consider urgent own-initiative action if there is
information indicating a significant loss, risk of loss or other adverse effects for
consumers, where action
is necessary to protect their interests.
EG 8.3.3(2)
suggests that the Authority may consider using this power where it has received
information that a firm’s conduct has put it at risk of being used for the purposes
of financial crime. EG 8.3.3(3) states that the Authority will consider using its
urgent
own
initiative
powers
where
a
firm
has submitted
to the Authority
inaccurate or misleading information so that that Authority is seriously concerned
about the firm’s ability to meet its regulatory obligations.

13.
EG 8.3.4 states that the Authority will consider the full circumstances of each case
when it decides whether an urgent imposition of a requirement is appropriate and
sets out a non-exhaustive list of factors which will determine whether the urgent
exercise of the Authority’s own-initiative power is an appropriate response to
serious concerns, including: the extent of any consumer loss or risk of consumer
loss or other adverse effect on consumers (EG 8.3.4(1)) and the extent to which
customer assets appear to be at risk (EG 8.3.4(2)), the financial resources of the
firm (EG 8.3.4(5)), the nature of any false or misleading information, including
where the information relates to the firm’s potential involvement in financial crime
(EG 8.3.4(3)) the firm’s conduct, including whether there is a risk the firm has
been or may be used to facilitate financial crime (EG 8.3.4(6)) and the impact
which the use of the Authority’s own-initiative powers will have on the firm’s
business and on its consumers (EG 8.3.4(9)).

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