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Swinton fined £7.4m over mis-sold insurance add-ons Swinton fined £7.4m over mis-sold insurance add-ons
(2 months later)
Insurer Swinton has been fined £7.4m and has set aside more than £11m to compensate customers after the City regulator found it had mis-sold add-on insurance policies over a two-year period.Insurer Swinton has been fined £7.4m and has set aside more than £11m to compensate customers after the City regulator found it had mis-sold add-on insurance policies over a two-year period.
It is the biggest fine of its kind for an insurer and comes days after the Financial Conduct Authority (FCA) announced an investigation into the market in add-ons.It is the biggest fine of its kind for an insurer and comes days after the Financial Conduct Authority (FCA) announced an investigation into the market in add-ons.
The FCA said that between April 2010 and April 2012 Swinton had sold personal accident, home emergency and motor breakdown policies to customers without providing enough information about the terms and conditions or cancellation process.The FCA said that between April 2010 and April 2012 Swinton had sold personal accident, home emergency and motor breakdown policies to customers without providing enough information about the terms and conditions or cancellation process.
The policies, which made the firm £93m, were sold alongside home and motor insurance, but the FCA said Swinton had not made it clear that they were optional extras and separate from the core cover being bought.The policies, which made the firm £93m, were sold alongside home and motor insurance, but the FCA said Swinton had not made it clear that they were optional extras and separate from the core cover being bought.
The insurer failed to properly monitor sales calls and its aggressive sales strategy meant it failed to treat customers fairly, the FCA said.The insurer failed to properly monitor sales calls and its aggressive sales strategy meant it failed to treat customers fairly, the FCA said.
The problems emerged when a new chief executive, Christophe Bardet, was appointed at Swinton and conducted a review of the business, and the insurer reported itself to the regulator.The problems emerged when a new chief executive, Christophe Bardet, was appointed at Swinton and conducted a review of the business, and the insurer reported itself to the regulator.
The firm set aside £11.2m to compensate customers who were victims of mis-selling, and in summer 2012 it contacted more than 650,000 policyholders who it believes may have been affected. So far it has returned £1.9m.The firm set aside £11.2m to compensate customers who were victims of mis-selling, and in summer 2012 it contacted more than 650,000 policyholders who it believes may have been affected. So far it has returned £1.9m.
Anyone who has not been contacted but thinks they may have bought monthly cover as a result of mis-selling has been urged to contact Swinton directly.Anyone who has not been contacted but thinks they may have bought monthly cover as a result of mis-selling has been urged to contact Swinton directly.
Tracey McDermott, the FCA's director of enforcement and financial crime, said Swinton had failed its customers and prioritised profit. "At the FCA we have been clear in our expectation that firms must behave in the interests of consumers.Tracey McDermott, the FCA's director of enforcement and financial crime, said Swinton had failed its customers and prioritised profit. "At the FCA we have been clear in our expectation that firms must behave in the interests of consumers.
"Today's outcome shows our approach in action and will act as a deterrent for other firms tempted to put profit figures above the fair treatment of customers.""Today's outcome shows our approach in action and will act as a deterrent for other firms tempted to put profit figures above the fair treatment of customers."
In a statement the insurer said it "acknowledges the shortcomings in its sales practices during this period, and the company unreservedly apologises to customers".In a statement the insurer said it "acknowledges the shortcomings in its sales practices during this period, and the company unreservedly apologises to customers".
The regulator said the fine would have been bigger had Swinton not settled at an early stage in its investigation or taken part in an FCA study, published this year, which looked into how letters offering compensation could be written to make sure more customers respond.The regulator said the fine would have been bigger had Swinton not settled at an early stage in its investigation or taken part in an FCA study, published this year, which looked into how letters offering compensation could be written to make sure more customers respond.
The FCA said the case was unconnected to its market review of add-ons, which will look at insurance sold alongside cars and mobile phones, as well as broader issues of competition in the industry.The FCA said the case was unconnected to its market review of add-ons, which will look at insurance sold alongside cars and mobile phones, as well as broader issues of competition in the industry.
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