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(3) indirectly, the ongoing capital to a connected company, OIL (no allegation
of wrongdoing is made against OIL).
4.30. Use of these sums may have provided One Call with a competitive advantage
because it did not have to raise the funds itself and this may have enabled One Call
to offer customers lower insurance prices than its competitors which did comply
with the Client Money Rules.
4.31. Without performing a compliant client money calculation prior to the withdrawals,
One Call was unable to properly assess whether or not the amounts left in the Client
Money Bank Account were sufficient to meet One Call’s obligations to its clients, or
whether the withdrawals generated a deficit on the Client Money Bank Account.
4.32. In fact, during the Relevant Period and because of the way One Call treated the
T36 monies, One Call withdrew substantial amounts of client money which were
funds over and above the amounts due to it from commission, fees and charges.
Due to One Call’s failure to perform an adequate client money calculation, or to
correctly identify the T36 monies were client money, it is not possible to calculate
when the Client Money Bank Account was first put into a deficit by One Call’s
withdrawals. It has also not been possible to calculate to what extent One Call
continued to maintain a deficit on the Client Money Bank Account throughout the
Relevant Period, or whether any of the payments noted in paragraph 4.29 above
consisted solely of client money. However, following a visit by the Authority in
December 2013, One Call calculated that it had a deficit of approximately £17.3
million (as at January 2014), which it was unable to repay on the same day that
the calculation was performed, in breach of CASS 5.5.63R(1)(b)(i). Following
Authority intervention, One Call repaid the deficit.
4.33. One Call’s failure to treat client money appropriately was particularly serious. The
Client Money Rules are designed to protect consumers’ money in the event of the
failure of a firm and One Call’s failings meant that this protection would not have
been offered to some of its customers. As a result of its failings, in the event that
One Call became insolvent and a primary pooling event occurred, the client money
that it held at the time would have been pooled and then distributed among
customers in proportion to the amount they paid to One Call. For the small number
of customers who did not have the benefit of risk transfer this may have meant,
for example, having to pay again for their insurance. These customers may also
have been left without compulsory insurance cover, thereby exposing them to the
risk of being unable to claim on insurance they believe they held.