Regulator takes action for failing to treat customers fairly.
The FSA has fined Hastings £735,000 for failing to treat its customers fairly in relation to cancelling around 4,550 incorrectly priced car insurance policies.
During two separate periods between July and September 2007, Hastings discovered that due to an internal system error, inaccurate insurance quotations were given to customers, which resulted in some of them paying significantly lower premiums than they should have.
Hastings, recently put up for sale by its parent company IAG, cancelled the policies but in doing so failed to give sufficient consideration to paying the premium shortfall to the insurance provider or investigating other possible remedies.
The FSA found that the firm had invoked a cancellation clause to cancel the policies which the FSA considers was not generally intended to be used in circumstances such as these.
The FSA found that the way in which the policies were cancelled and the service that the firm gave to its customers following the cancellation showed the firm focused on the financial cost to itself and did not properly consider the alternatives or the detrimental effect on customers. Following these incidents the firm has now strengthened the controls surrounding customer treatment and agreed with the FSA to write to all affected customers and review the compensation it offered to ensure that its customers are treated fairly.
Margaret Cole, FSA director of enforcement, said: “The FSA has stressed to all firms the importance of treating their customers fairly but it is clear from our investigation that Hastings put its own interests ahead of those of its customers.
"The firm failed to consider properly what effect cancelling policies might have on its customers which illustrates that the fair treatment of customers had not been embedded into its corporate culture as our TCF principle clearly requires.”
Hastings agreed to settle the case at an early stage, otherwise the fine would have been £1.5m.
