Insurance Authority bans former insurance agent for three years for using a false academic transcript under the former self-regulatory regime
16 May 2023
The Insurance Authority (IA) has taken disciplinary action against a former insurance agent who used a false academic transcript purportedly issued by an Australian university to establish that he met the minimum education requirements to be an insurance agent under the previous self-regulatory regime. The case was handled in accordance with the requirements in place at the time the false academic certificates were submitted. The former agent has been prohibited from applying to be licensed for 3 years.
The former agent admitted using the false academic transcript in 2015 in support of his applications to be registered with the Insurance Agents Registration Board (IARB) as an insurance agent of two authorized insurers (a life insurer and a general insurer belonging to the same group of companies). In his application forms, the former agent declared inter alia that all the information provided in the application form was complete and true. The application was accepted by the IARB and the former agent was registered as an insurance agent.
At the beginning of 2018, after his agency contract with his original principal insurers had been terminated, the former agent used the same false academic transcript purportedly issued by the Australian university to register with the IARB as the insurance agent of two other authorized insurers (a life insurer and a general insurer belonging to the same group of companies). Again the applications were accepted by the IARB.
In April 2018, one of the former agent’s new insurer principals engaged an external vendor to verify the authenticity of the academic transcript. Through this verification process, the insurer discovered that Australian University had not issued the transcript and that the transcript was false. The insurer then sought to clarify the matter with the former agent. Having done this, the insurer then received a letter purportedly issued by the Australian university’s graduation office verifying that the former agent had been enrolled with the university. The letter, however, was undated, unsigned and bore an incomplete telephone number. The insurer carried out further due diligence on the letter though its vendor and discovered that the letter had not been issued by the Australian university’s graduation office and was false. The former agent’s contract was then terminated and the case was reported to the IA.
On investigation by the IA, the former agent admitted having purchased the false academic transcript for AUD 100 and was aware the information contained in the transcript was not true. He further admitted to having purchased the false letter after learning that the insurer could not verify the authenticity of the false academic transcript.
These cases which involve insurance agents relying on false academic certificates to enter into the insurance industry pre-date the new regulatory regime for insurance intermediaries under the auspices of the IA which came into force in September 2019. These cases cast a shadow on the insurance industry in previous years. However, this particular case demonstrates why the new regulatory regime for intermediaries demands that insurers (through their “intermediary management control function”) have in place adequate controls and processes in relation to their agency forces, including in the due diligence processes for recruitment and on-boarding. In this case, the discovery of false academic certificate was made as a result of one of the insurer’s verification processes yielding the truth, enabling it act quickly by terminating the agent and referring the case to the IA.
Any individual who displays such a lack of ethics and integrity by purchasing a false academic transcript, using it to become an insurance agent and then doubles down on the lie by acquiring a false letter seeking to justify the transcript’s veracity, violates the trust on which the insurance market must be founded and has no business being part of the financial services industry. The IA has no tolerance for individuals who do this and will not hesitate to continue to take action.
As indicated, this case had to be handled in accordance with the transitional arrangements in Schedule 11 of the Insurance Ordinance (Cap. 41) (the Ordinance), which required the relevant requirements in place at the time to be applied and the disciplinary approach of the IARB1 to be followed. Under the current (i.e. new) regulatory regime for licensed insurance intermediaries which came into force on 23 September 2019, it is a criminal offence to provide false information to the IA in connection with an application for a licence or an approval under the Ordinance2. An individual who commits such offence, if found guilty, will be liable to a fine at level 53 and to imprisonment for 6 months. As stated, the IA will have no hesitation in prosecuting any individual who seeks to submit a false academic certificate to the IA as part of the licensing process.
As this case indicates, insurers (and their intermediary management control functions) also have an important role to play in ensuring that, as part of their recruitment and on-boarding processes for new insurance agents, they carry out adequate checks on the accuracy of the information being submitted to the IA as part of a licensing application by their prospective new insurance agents. The checking and verification processes adopted by the insurer which discovered the truth in this case, are recommended as a vital part of an insurer’s checking processes before appointment of a new insurance agent. Through its inspection of insurers and ongoing conduct supervision work, the IA will continue to assess the adequacy of insurer’s controls and processes on this issue.
For further information on the IA’s enforcement work, please see the “Enforcement News” section of the IA’s website. Public disciplinary actions against licensed insurance intermediaries may also be searched on the Register of Licensed Insurance Intermediaries on our website.
Ends
Notes:
1 Pursuant to section 113(4)(d) of Schedule 11 to the Ordinance, in handling non-compliance cases unresolved by the Self-Regulatory Organisations (SROs), the IA may impose a disciplinary sanction on a specified person that could have been imposed by the SRO concerned had the case been handled by the body.
2 Section 64ZZE of the Ordinance sets out the offence to provide false information in connection with application for licence or approval.
3 Pursuant to Schedule 8 to the Criminal Procedure Ordinance (Cap. 221), a fine at level 5 is HK$50,000 at present.