FCA Fines Firm for Poor Complaints Handling
Policies by Bruce Fayle
The Financial Conduct Authority (FCA) has fined an
insurance intermediary firm £2,834,700 for poor
complaints handling between June 2009 and September
2011, including failing to identify the root causes
of recurring issues and put them right. ??During its
investigation, which was begun by the Financial Services
Authority, the FCA found significant failings in the way
the Firm handled complaints.
Underlying all of the failings was the Firm’s failure
to record complaints, meaning that management
information and regulatory reporting was wrong. Other
serious shortcomings revealed during the investigation
included:
Since the investigation, the Firm has employed a third party
to review its complaints processes. In addition, the Firm
has conducted a separate review to identify customers
that suffered a loss and pay them redress. The Firm has
reviewed 7,099 complaints and paid compensation to
1,438 customers.??
Tracey McDermott, the FCA’s director of enforcement and
financial crime, said “In any business things can go wrong.
Where it does, it is in the interests of both consumers and
firms to put it right.
Proper complaints handling is essential to ensure customers
are treated fairly. It is also a key tool to help firms identify
where things are not working as they should and allow
them to take steps to put problems right themselves.
•
complaints were not investigated fully or
Where this is done effectively it not only means a better
resolved appropriately or consistently;
relationship between firms and their customers but also
•
complaints about mis-selling were often
avoids the cost and reputational damage of regulatory
rejected just because the customer had signed
a Direct Debit form, but it was not clear why the action.??
Firm thought this alone indicated a valid sale;
Tracey McDermot continued, “The Firm had wide ranging
and
failures across its complaints handling processes - it failed
•
the failure to investigate and address the
to investigate complaints properly or to keep accurate
root-cause of complaints about the sale of
records. This is simply not good enough - it does not
insurance policies, such as mis-selling.
meet our requirements and does not meet the needs of
Taken together these failings meant that the Firm was customers.”
unable to treat customers fairly and come to a balanced
decision about whether or not complaints had substance. She went on to say,??“Last week we published the findings
Nor was it able to accurately detect areas that were of a review into mobile phone insurance which found that
repeatedly being complained about so it could put them sometimes there was a gap between what customers
right and improve its customers’ experiences. These expect, and what they are really getting. There are
standards are expected of all regulated firms and are common themes in this case that revolve around consumer
designed to ensure that when problems do occur, they expectations and how they are sometimes being treated
in practice. That review publication and this Final Notice
are quickly identified and corrected.??
stand side by side and I wholeheartedly recommend that
all insurance firms – not just those in the mobile phone
insurance market - read the two together.”??
The Firm settled at an early stage of the investigation and
therefore qualified for a 30 per cent discount. Without the
discount the fine would have been £4,049,637.??
Source: Financial Conduct Authority
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