FCA FINES POL­ICY AD­MIN­IS­TRA­TION SER­VICES LTD £2.8 MIL­LION FOR POOR COM­PLAINTS HAN­DLING OF MO­BILE PHONE INSURANCE POLI­CIES SOLD BY PHONES 4U LTD

Insurance - - COMPANY CORNER -

Source: Fi­nan­cial Con­duct Au­thor­ity ( FCA) Press Re­lease, 3 July 2013 THE Fi­nan­cial Con­duct Au­thor­ity (FCA) fined the Pol­icy Ad­min­is­tra­tion Ser­vices Lim­ited (PAS) £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. PAS is an insurance in­ter­me­di­ary which ad­min­is­ters mo­bile phone insurance poli­cies sold by Phones 4u Lim­ited (Phones 4u); it is re­spon­si­ble for cus­tomer re­la­tions, claims and com­plaints linked to th­ese sales. Un­der­ly­ing all of the fail­ings was PAS’s fail­ure to record com­plaints, mean­ing that man­age­ment in­for­ma­tion and reg­u­la­tory re­port­ing was wrong. Other se­ri­ous short­com­ings re­vealed dur­ing the in­ves­ti­ga­tion in­cluded the fol­low­ing:

• Com­plaints were not in­ves­ti­gated fully or re­solved ap­pro­pri­ately or con­sis­tently; Com­plaints about mis-sell­ing were of­ten re­jected just be­cause the cus­tomer had signed a Di­rect Debit form, but it was not clear why PAS thought this alone in­di­cated a valid sale; and The fail­ure to in­ves­ti­gate and ad­dress the root­cause of com­plaints about the sale of insurance poli­cies, such as mis-sell­ing. Since the in­ves­ti­ga­tion, PAS has em­ployed a third party to re­view its com­plaints pro­cesses. Ad­di­tion­ally, PAS has con­ducted a sep­a­rate re­view to iden­tify cus­tomers that suf­fered a loss and pay them re­dress. PAS has re­viewed 7,099 com­plaints and paid com­pen­sa­tion to 1,438 cus­tomers. Tracey McDer­mott, the FCA’s di­rec­tor of en­force­ment and fi­nan­cial crime, point out that find­ings from a re­view into mo­bile phone insurance found that some­times there was a gap be­tween what cus­tomers ex­pect and what they are re­ally get­ting. There are com­mon themes in this case that re­volve around con­sumer ex­pec­ta­tions and how they are some­times be­ing treated in prac­tice. She rec­om­mends that all insurance firms – not just those in the mo­bile phone insurance mar­ket – read them. PAS 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.

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