Insurance broking giant fined £7m for mis-selling 'extras'
Britain’s biggest high street insurer Swinton was slapped with a £7.38m fine after it was caught mis-selling “add-on” insurance to more than 650,000 people.
The Financial Conduct Authority said the insurer’s “aggressive sales strategy” helped it pocket an extra £92.9m from customers by flogging optional monthly extras such as personal accident insurance or home emergency and motor breakdown policies.
But Swinton, which runs a 500-strong UK branch network, didn’t tell customers the extra cover was optional when it sold it between April 2010 and April 2012.
Tracey McDermott, director of enforcement and financial crime at the FCA, said Swinton failed its customers. “When selling monthly add-on policies, Swinton did not place the consumer at the heart of its business. Instead it prioritised profit,” she said.
Swinton has been forced to allocate £11.2m to repay people who were mis-sold. Some £1.9m has already been paid out but policyholders who think they bought monthly cover as a result of mis-selling should contact the company.
The City watchdog’s record fine since taking over regulatory responsibility in April was because the insurer did not explain the cover clearly. It also failed to give enough information about the terms of the policy, including the conditions and limitations. Damningly, the FCA said the nature of the failings, particularly poor sales scripts, meant that every sale could have been a mis-sale.
Which? executive director, Richard Lloyd, said: “It’s good to see the FCA handing out a hefty fine, which sends a very clear message to the insurance industry that mis-selling won’t be tolerated.”
Swinton’s chief Christophe Bardet said: “We apologise for these shortcomings. They were not compatible with the proud history of Swinton.”
Biggest Fines in 2013
£87.5m, Royal Bank of Scotland, February, Libor rigging
£30m, Prudential, March, failing to inform FSA of acquisition plans
£9.5m, UBS, February, failings in its sale of an AIG fund
£7.4m, Swinton, July, mis-selling “add-on” insurance
£6m, Sesame, June, failing to ensure advice was suitable
£4.3m, Lloyds, February, delayed PPI redress payments
£4.2m, EFG Private Bank, March, anti-money laundering failings
£3.1m, JPMorgan, May, systems and control failings
£2.8m, Policy Administration, July, poor complaints handling
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