In addition Philip, who was a director at Towergate between October 2005 and June 2012, is banned from having direct responsibility for client and insurer money.

The regulator said Towergate, an insurance intermediary which holds both client and insurer money, accumulated a shortfall of £12.6m in its client and insurer money bank accounts which, due to systems and controls weaknesses, went undetected for a number of years.

Mark Steward, director of enforcement and market oversight at the FCA said: ‘We have issued repeated warnings to the industry on the importance of complying with client money rules which are designed to ensure that client money is adequately protected in the event of a firm failing.  There can be no excuses given these warnings and the stakes involved.

'Senior management are ultimately responsible for ensuring that firms are following our rules and it is very clear that Mr Philip failed in that regard, falling well below the standards we require.'

The FCA investigation found that between June 2005 and December 2013 weaknesses in Towergate’s controls meant that on four occasions sums totalling £10.5m were transferred from Towergate’s client money and insurer money bank accounts to the office bank account of an intermediate parent company.  However, Towergate failed to properly consider the implications of these transfers which resulted in accumulated deficits of £5m in the client money bank accounts and £5.5m in its insurer money bank accounts.

As part of its arrangements with clients Towergate is permitted to retain all interest on balances held on client money bank accounts.  Any interest earned on client money is therefore Towergate’s money and should be removed from client money bank accounts. 

Towergate’s banking practices should have meant that interest did not accrue on these accounts; however on a number of occasions from June 2005 to October 2011, it did, and this was not identified by the firm until 2013, resulting in a total of £1.45m of interest belonging to Towergate that was not removed from client money bank accounts.

In October 2007 the firm transferred £2.13m from a client money bank account to an insurer money bank account. That transfer was not reflected accurately in the accounting records which led to the sum being transferred again in January 2009 creating a £2.13m shortfall in its client money bank account.

From December 2008, in breach of its agreements with insurers, Towergate changed the basis upon which it removed commission owed to it by insurers from its insurer money bank accounts, resulting in a £3.6m deficit.

Towergate first identified there was a shortfall in its client money and insurer money bank accounts in May 2013, but did not rectify the problem until October and November of that year despite the regulatory requirement for any shortfall to be corrected on the day the firm performed its client money calculation.  Towergate also failed to report the shortfall immediately to the FCA.

The FCA found that Philip failed to exercise due skill, care and diligence in managing the business for which he was responsible. The regulator said that on four occasions in late 2010 and early 2011, he instructed or approved withdrawals of money from Towergate’s client and insurer money bank accounts without following processes and procedures which were in place for making such withdrawals.  As a result, there was a shortfall in the client and insurer money resource of £10.5m.

Philip agreed to settle at an early stage of the investigation and therefore qualified for a 30% discount on the proposed financial penalty of £85,817. Towergate also settled early and received a 30% discount on its penalty of £3.76m.