A £2.8m fine has been issued to an insurance intermediary over complaints by Phones 4u customers over poor mobile phone insurance.
The fine covers complaints between June 2009 and September 2011. The Financial Conduct Authority, who issued the fine, said insurance intermediary Policy Administration Services (PAS) 'failing to identify the root causes of recurring issues and put them right'. The PAS is responsible for customer relations, claims and complaints relating to phone insurance policies sold by Phones 4u. The strongly worded ruling said there were 'significant failings' in how complaints were handled, highlighting a failure to record complaints sufficiently. It said PAS failed to treat customers fairly or come to a decision whether complaints had substance.
The PAS apologised for the failings and has compensated almost 1,500 affected customers. Phones 4u said its relationship with PAS would not change following the ruling because it has reviewed its processes.
The FCA identified three 'serious shortcomings'. The first was that complaints were not investigated fully or resolved appropriately or consistently. Complaints about mis-selling were frequently thrown out because a customer had signed an insurance policy using a Direct Debit form. The FCA said PAS failed to investigate and deal with the roo causes of customer complaints.
The PAS had settled with the FCA at an early stage of the investigation, otherwise it would have faced a fine of just over £4m.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: 'PAS had wide ranging failures across its complaints handling processes - it failed to investigate complaints properly or to keep accurate records. This is simply not good enough - it does not meet our requirements and does not meet the needs of customers.'
A PAS spokesperson said: 'We accept there were failings in our customer complaints-handling process between June 2009 and September 2011. We apologise for those failings and have compensated the 1,438 affected customers. We engaged an independent third party to undertake a comprehensive review, and our processes were considerably improved in 2011 to ensure such failings do not occur again. We have been open and co-operative with the FCA to fully address the issues raised by its investigation, and we continue to work with the FCA to promote high standards of regulatory conduct within the industry.'
Author: Graeme Neill