Carphone Warehouse mis-selling results in FCA fine for over 29m

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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).

Plusnet gets a “minus” – and a big fine – for incorrect billing

Plusnet has become the latest telecom provider to be fined by the regulator Ofcom. The broadband and phone provider, owned by BT, has been fined £880,000 for billing former customers. It is the third provider in less than 6 months to be fined by Ofcom.

In October 2016 Vodafone was fined £4.6m for breaches of consumer protection laws and in January 2017 EE was fined approximately £2.7m for incorrect billing.

Plusnet faces a fine of £880,000 imposed by Ofcom for continuing to bill more than a thousand former customers for landline and broadband services. The case involves more than 1,000 ex-customers who were overcharged a total of more than £500,000.

Ofcom says in its press release:

“The penalty is the result of an investigation, which found that the telecoms company broke a fundamental billing rule by continuing to charge a group of customers for landline or broadband, after they had cancelled their service.

Once a customer cancels his or her home phone or broadband service, providers’ billing systems must recognise that the line is ‘ceased’. In this case, an error in Plusnet’s billing system meant that cancelled lines were still recognised as ‘live’.As a result, 1,025 customers who had cancelled either their landline or broadband service continued to be billed, meaning they were overcharged by more than £500,000 in total.

Lindsey Fussell, Ofcom’s Consumer Group Director, said: “There can be no margin for error, and no excuses, when it comes to billing customers correctly.”

“This fine should serve as a reminder to telecoms companies that they must adhere to Ofcom’s billing rules at all times, or face the consequences.””

Ofcom says that Plusnet has attempted to refund all affected ex-customers. It has so far refunded 356 customers a total of £212,140, which included interest at a rate of 4% for each customer. Any remaining money, from former customers who could not be reached, has been donated to a dozen local charities. Plusnet has also clarified to Ofcom the steps it has taken to prevent any future billing errors of this kind.

Ofcom says that the fine, which must be paid to Ofcom within 20 working days, will be passed on to HM Treasury.

I’ve said it before and I’ll say it again, telecoms really are the worst sector for customer service. It really needs a company to pull out all the stops and do things differently, risk not making any money for a while and then watch everyone flock to them for the customer service.

Useful information
Ofcom does not investigate individual claims. If you have a complaint about a telecom provider whether broadband, landline or mobile, see All you need to know about complaining to telecom providers which provides information and how to complain effectively to telecom providers.

See How to Complain; The Essential Consumer Guide to Getting Refunds, Redress and Results! for tips, advice, consumer laws and templates for complaining effectively.