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