The FCA has also imposed a 121 day restriction on One Call, preventing it from charging renewal fees to its customers, which is anticipated to cost the firm around £4.6 million.
The investigation found that between January 2005 and September 2014, One Call received client money in the course of its activities as an insurance intermediary which it failed to adequately protect.
It failed to appreciate that certain Terms of Business Agreements it wrote business under did not provide effective risk transfer and failed to operate its client money account in accordance with the Client Money Rules.
Secondly, One Call failed to treat funds advanced by a third party premium finance provider as client money. As a result, One Call inadvertently spent client money, resulting in a substantial client money deficit of £17.3 million, (which it has subsequently repaid) and exposing customers to a "significant risk of loss".
The FCA believes that One Call inadvertently used sums from its client money bank account to finance its own working capital requirements, make payments to directors and, indirectly, to capitalise a connected company, One Insurance Limited, although no allegation of wrongdoing is made against One Insurance.
CEO John Radford has also been banned from having any responsibility for client or insurer money in relation to regulated activity in financial services.
In the FCA’s view, Radford failed to carry out his responsibilities with due skill, care and diligence, in breach of Statement of Principle 6, in a number of ways. This included failing to keep himself informed of changes to regulatory requirements for handling client money and, when warned by One Call’s auditor that it might not be complying with such requirements, failing to investigate or ensure that One Call acted on those warnings.
The FCA also believes that Radford failed to ensure that One Call established robust systems and controls for assessing whether effective risk transfer agreements with insurers were in place so that if any client money shortfalls arose as a result of One Call’s failure, insurers rather than customers would bear this risk.
Both One Call and John Radford agreed to settle at an early stage of the investigation and therefore qualified for a 30% discount. Were it not for this discount, the FCA would have decided to impose a fine of £977,147 and a restriction for a period of 182 days on One Call and a fine of £669,531 on Mr Radford.
Third party company One Insurance Limited has challenged the FCA's findings and referred the case to the Upper Tribunal.
The Tribunal will determine the appropriate action for the FCA to take, which may or may not result in amendments to the Decision Notices.
These Decision Notices are therefore provisional, so far as they refer to One Insurance, in light of the challenge being made in the Tribunal.
