Whistle blowers to be thanked for FCA investigation
The mis-selling of insurance
Following a whistle blowing report and investigation, The Financial Conduct Authority (FCA) has fined Carphone Warehouse for mis-selling insurance. It found that the company had sold mobile phone insurance and technical support (called Geek Squad) to people who didn’t need it.
Carphone Warehouse FCA fine
The FCA fined Carphone Warehouse £41,582,300. However, Carphone Warehouse was given a 30% discount for agreeing with the findings. So it will pay £29,107,600.
How Carphone Warehouse mis-sold insurance
The FCA investigated a period over 8 years (1 December 2008 to 30 June 2015). Sales of Geek Squad policies were worth over £444.7 million in this period. The FCA found a number of issues relating to mis-selling and these included:
- Carphone Warehouse did not give sales assistants appropriate training. For example, they did not asses customer’s needs as to whether the insurance was required. Some customers had home insurance or bank account insurance for instance that would cover them.
- Sales staff were trained in “objection handling”, with the focus being on overcoming customer objections rather than assessing whether the product was suitable for the customer.
- A large number of policies were cancelled early. For example in January 2014 30% of policies were cancelled within the first three months of inception. Despite this being an indicator of high risk of mis-selling Carphone Warehouse did not consider it.
- When customers complained about the insurance sale, Carphone Warehouse failed to properly investigate and fairly consider their complaints. So valid complaints regarding mis-selling were not upheld and it contributed to the inaccurate picture of mis-selling indicators.
Whistleblowers to thank for Carphone Warehouse investigation and fine
It was Carphone Warehouse employees not customers who brought this matter to light.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
“Without whistleblowers coming forward, these practices may never have come to light. In the past few years, whistleblowers have contributed critical intelligence to the enforcement actions we have taken against firms and individuals.”
How to complain if you have been mis-sold phone insurance
The FCA says “Customers of The Carphone Warehouse who think that they may have been mis-sold Geek Squad should contact the firm directly (by telephone: 0800 049 6190, by post: Geek Squad, PO Box 358, Southampton, SO30 2PJ or on-line www.geeksquad.co.uk/contact/complaints). If customers are not content with the firm’s response, they may then refer the matter to the Financial Ombudsman Service.”
If you have been mis-sold insurance or service etc. it is a breach of The Consumer Protection from Unfair Trading Regulations 2008 (amended 2014) and you should write to the company quoting that Act. (See link for details of the Act and how to use it).