George McGregor was fined for entering into contracts on behalf of RLA without authorisation and which benefited a former RLA employee
The Financial Services Authority has banned and fined the former finance director of Royal Liver Assurance £109,000 for abusing his position, including forging the signature of its chief executive. The fine imposed on George McGregor would have been £1m but the City watchdog slashed it because he co-operated fully and the penalty was deemed to cause "serious financial hardship".
A spokesman explained that the fine was reduced to a level that McGregor can pay without going bankrupt. The £1m penalty was also reduced by 30% because McGregor agreed to settle at an early stage.
The FSA spokesman said the original size of the fine indicates the seriousness of McGregor's transgressions and will serve as a benchmark if there is a similar case in future.
Merseyside police launched its own investigation but decided not to bring a criminal case.
McGregor was fined for entering into contracts on behalf of RLA without authorisation and which benefited a former RLA employee. Between May and November 2009 he agreed contracts on behalf of the insurer with two companies that were controlled by the former employee.
McGregor was negotiating the former employee's bonus but thought that the amount he had agreed with the individual would not be approved by RLA's board. He therefore sought to conceal the level of bonus by entering into the two contracts to pay substantial sums to the former employee's companies.
McGregor forged the signature of RLA's chief executive to process payments relating to these contracts. This resulted in RLA paying at least £3.6m to the two companies and incurring a possible contractual liability of up to £18m.
Tracey McDermott, acting director of enforcement and financial crime, said: "McGregor abused his position of responsibility and engaged in a dishonest, deliberate and sustained course of misconduct. McGregor failed to act with integrity and is not a fit and proper person to work in the financial services industry. Those who take on the responsibility of being an approved person should be in no doubt about our commitment to take the strongest action to tackle behaviour which falls below the high standards we expect."
RLA was founded in 1850 as the Liverpool Lyver Burial Society, which would fund funerals and save families from financial ruin when the main breadwinner died. It was taken over by the Royal London Mutual Insurance Society last July.