The FSA has fined The Carphone Warehouse £245,000 for not treating its customers fairly following telephone sales of general insurance and for failing to inform the regulator in a timely manner of significant systems failures within its telesales distribution channel.
An FSA investigation found that between 14 January and 24 October 2005 The Carphone Warehouse failed to send 118,000 customers, who had bought mobile phone insurance through its telesales channel, a Statement of Demands and Needs (SDN) in written form.
It was subsequently discovered that 56,000 of those customers also did not receive a policy summary setting out its main features.
Sarah Wilson, director of retail firms at the FSA said: "The Carphone Warehouse failed its telephone sales consumers by not giving them all the information necessary for them properly to understand the insurance product they had bought. Customers were therefore exposed to the risk of being left with an insurance policy which was unnecessary or provided incomplete cover leading to rejected claims. In either case they could suffer some degree of financial loss.
"As a result of the extended delay in fixing the problem, over 100,000 customers were potentially disadvantaged."
The Carphone Warehouse became aware of its non compliance with the SDN requirement in March 2005. However, according to the FSA, from March to October the firm continued to sell insurance when it knew it was not complying with the FSA's rule.
The FSA said it was only made aware of the issue in October after a further request for information from the FSA the firm discovered that there was no mechanism in place for sending out policy summaries to telesales customers who had signed up through its E2Save sales channel.
