Court of Appeal upholds winding up order for insurance firms

The Court of Appeal has upheld the decision to wind up Digital Satellite Warranty Cover Limited and Bernard Freeman and Michael Sullivan, both trading as Satellite Services.

Both companies had previously appealed against a winding up order secured by the Financial Services Authority (FSA) from the High Court, as they attempted to avoid possible corporate insolvency.

However, the Court of Appeal dismissed both companies’ appeals on Tuesday 29th November, with the firms found to be carrying out unauthorised business.

Digital Satellite Warranty Cover Limited and Satellite Services, which are both based in Kirkby, Liverpool, provided insurance cover for Sky satellite TV equipment in return for a premium priced at between £6.49 and £11.49 per month.

Although the companies described the cover they offered customers as extended warranty, the High Court ruled on January 31st 2011 that the cover amounted to a contract of insurance – a service provision that is regulated by the FSA.

Since both companies are not authorised by the FSA, they were found guilty of contravening the law and served with winding up orders.

A third company, Nationwide Digital Satellite Warranty Services Limited, was also served with a winding up order in January 2011. However, the company, which is also based in Kirby, Liverpool, did not appeal the decision reached by the High Court.

Tracey McDermott, acting director of enforcement and financial crime at the FSA, welcomed the fact that the High Court’s decision was upheld by the High Court.

“This decision will help protect satellite TV customers from inadvertently dealing with an unauthorised business, but also serves as a useful reminder to other firms that offer similar cover that they may need to seek authorisation,” she said.

“Consumers should take a moment to consider who they are dealing with and whether or not that firm needs to be FSA authorised.”