Broker banned for trying to hide payment mistake

Broker banned for trying to hide payment mistake | Insurance Business Asia

Broker banned for trying to hide payment mistake

Hong Kong’s Insurance Authority (IA) has issued a five-month ban to broker Ho Man Tat, after the regulator found him not being “fit and proper” to conduct insurance broking business.

The ban, which lasts from June 17 until Nov. 16, was for improper conduct occurring between August and December 2019. According to the regulator, Ho received money from a client to pay for the renewal of an insurance policy. Instead of depositing this money into his broker company’s account (as the regulations at the time required), Ho placed the money into his personal account and planned to pay the amount directly to the insurer.

However, when Ho attempted to pay the premium using an automated teller machine, he mistakenly inputted the wrong policy details. This resulted in the money being paid to a completely different insurance policy that did not belong to his client.

Ho sought to rectify this error but tried to hide the fact that it was his mistake that caused it and prevent his breach of regulations from coming to light. Ho made a letter for his client to sign, which stated that it was the client (rather than him) who had made the erroneous payment to the insurer. The letter also requested the insurer to transfer the payment over to the client’s policy.

After some time, Ho noticed that the insurer had not transferred the erroneous payment to his client’s policy. To make sure that the client’s policy was renewed, Ho paid for the premium himself. Trying to recover the initial erroneous payment, Ho prepared further documentation for his client to sign, again asserting that it was the client who had made the erroneous payment. Ho also wrote a memo to the insurer which reinforced his fictitious version of events.

The insurer later discovered that it was Ho who made the erroneous payment and it asked his employer to investigate the matter. During the initial phase of the investigation, Ho continued to maintain that it was not him who made the erroneous payment. However, he eventually admitted the truth, after which the insurer returned the erroneous payment to him.

According to the IA, Ho’s conduct did not meet the standards expected of a prudent insurance broker by failing to place the client monies he received into his broking company’s client account and displaying a lack of due care and diligence by inputting the wrong policy details when paying the premium.

The regulator also denounced as “reprehensible” the steps Ho took to prevent his own erroneous conduct from being discovered. The IA said that Ho put his own interests ahead of his client’s by knowingly and deliberately submitting misleading and false information to the insurer and leading his client to make false statements for his own benefit. The IA said Ho displayed a lack of integrity, which makes him not fit and proper to perform regulated activities as a licensed insurance intermediary.

The IA also noted that Ho had an otherwise clean disciplinary record and that he did not obtain any financial benefit from his conduct, even paying his own money just to ensure that the client’s policy would be renewed.

“It is vital for members of the public to be able to trust the integrity of licensed insurance intermediaries with whom they have dealings,” the IA said. “Conduct which displays a lack of integrity may render the person no longer fit and proper to be licensed and the IA will not hesitate to take disciplinary action to ensure policy holders and potential policy holders are protected and trust in the insurance industry is maintained.”