Financial watchdog probes mis-sales

Insurance customers could be in line for compensation after a probe by the City watchdog found evidence of mis-selling.

The Financial Conduct Authority (FCA) has been looking into the general insurance sector, which includes a wide range of products such as home, motor and travel insurance.

The probe focused on how middlemen sell policies for firms in the general sector. Firms have a responsibility to make sure middlemen or “appointed representatives” are acting in line with FCA rules.

The FCA wanted to understand the impact of these arrangements on customers, and find out whether firms had assessed the risks and put in place robust systems and controls to oversee their agents’ sales activities.

The watchdog found “significant shortcomings” when it came to firms’ understanding of their responsibilities for their appointed representatives and their control and oversight of their activities.

The watchdog also found “poor customer outcomes”, including people buying products they may not need or may not be eligible to claim on.

In one case, there was “significant evidence of mis-selling leading to actual customer detriment”.

The FCA said it was considering the need for customer redress and whether new regulatory action was needed.

The watchdog has taken action in relation to five firms.

It has also commissioned a review to assess whether detriment has been suffered by customers from misselling, and the adequacy of controls.

“There was significant evidence of mis-selling”