A DIRECTOR of a local insurance broker has been fined £200,000 by the regulator – the maximum financial punishment with in the Guernsey Financial Services Commission’s power.
David Merrien, of Guernsey Insurance Brokers Ltd, has also been banned from carrying out any functions within the regulated sectors of the Bailiwick.
The punishments were imposed after it was found he had been recommending clients to switch significant portions of their investments into one specific fund, of which he received significant amounts of commission into his personal bank account without the knowledge of the company.
The commission said his conduct, as a director and compliance officer, was ‘neither impartial or independent’. But Mr Merrien has labelled the punishments as unjust, unaffordable and ‘completely off the scale’. He has also criticised the investigation process and said he did not have sufficient funds to have full and proper legal representation throughout his ‘ordeal’.
The company, which has now done away with its investment part of the business, has been fined £8,000 while fellow director Richard Wickins has also been fined £8,000.
In its published decision, the GFSC said it considered it ‘reasonable, necessary and proportionate’ to impose the sanctions and penalties as ‘Mr Merrien is not a fit and proper person to perform any function in relation to regulated business in the Bailiwick of Guernsey’.
‘The commission’s independent senior decision maker found that Mr Merrien had failed to appreciate or properly to advise clients of GIBL of risks in connection with an investment into which they were persuaded to switch part of their pension funds, that he had recklessly promoted a high-risk investment which was unsuitable for retail investors, and that he had dishonestly diverted payments into his personal bank account,’ it said.
‘The contraventions by Mr Merrien as an authorised insurance representative were at the highest level of seriousness, and were exacerbated by his failures to deal openly and cooperatively with the commission in the course of its investigation or to accept responsibility for what he has done.
‘Mr Merrien’s behaviour is considered to be at the top end of the scale of severity.
The GFSC said Mr Merrien also caused his employer to breach a condition of its licence regarding the removal of records from the premises.
Mr Merrien told the Guernsey Press that three senior advocates could not understand the level of the fine.
‘The largest ever and “shockingly disproportional”, to any errors of judgement that may have taken place (in the opinion of the GFSC).
‘I am an individual and not a corporation and simply don’t have the financial backing behind me and I simply will not be able to pay the fine.
‘Please don’t get me wrong, I am not saying that mistakes were not made as to err is only human, but the punishment dealt to me is completely off the scale. ‘
He said he now doubted the fairness of the GFSC.
A series of conditions were imposed on Guernsey Insurance Brokers in relation to the investment side of the business.
However, Mr Wickins confirmed that it had surrendered its investment licence and would now concentrate just on general commercial and personal insurance. No conditions were made in relation to the general insurance side of the business.
The GFSC said it had no further comment to make.
Guernsey Police said it is aware of the GFSC investigation into this matter. ‘Our officers liaised with the regulator, and supported them, during the enquiry.’
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