The former financial director of Royal Liver, a mutual life assurance company, has been fined and banned from working in the industry.
The Financial Services Authority found that he entered into unauthorised contracts and forged the signature of the group’s chief executive to enable the money to be paid.
The FSA said George McGregor deserved a fine of £1m for the seriousness of the offence, but it reduced the amount to £109,000, payable in instalments, because of financial hardship.
According to the final notice in the case, in 2009, Mr McGregor wanted to pay a severance bonus to an employee who had recently left Royal Liver but thought the amount “would not have been approved by other members of RLA’s board”. So he entered into two investment management contracts with companies controlled by the former employee.
But in drafting the contracts with the help of the company’s legal team, Mr McGregor made a serious calculation error – rather than paying 0.005 per cent of the portfolio, which would have led to regular payments of £180,000, he signed a contract calling for fees of 0.05 per cent or payments of £1.8m, the final notice said. The larger figure exceeded the £500,000 limit on Mr McGregor’s authorisation powers.
When the first bills came in, Mr McGregor realised his error and falsified the chief executive's signature, leading to the payout of £3.6m to the two companies, the notice said. The payments were discovered in the audit process and Mr McGregor was dismissed from Royal Liver in 2010
Tracey McDermott, acting FSA enforcement director, said in a statement: “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.”
The final notice said that there was no evidence that Mr McGregor benefited personally from the contracts and the issue came up at “a particularly stressful period” for him.
Mr McGregor’s lawyer Stephen Hallam declined to comment.
Royal London Group, which acquired Royal Liver in July 2011, declined to comment.
Although the FSA referred the matter to the Merseyside Police, no charges have been filed.
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