Swinton Group hit with multimillion pound FCA fine

Published on

swinton

The Financial Conduct Authority (FCA) has fined Swinton Group Limited (Swinton), one of the largest insurance retailers on the high street, £7,380,400 for mis-selling.

The regulator found that Swinton’s aggressive sales strategy meant that it failed to treat customers fairly in its telephone sales of monthly add-on insurance policies.

Between April 2010 and April 2012, Swinton sold personal accident, home emergency and motor breakdown policies, which during the relevant period generated an income for accounting purposes of £92.9 million. The FCA found that Swinton did not provide enough information to customers about the key terms of the policies and also failed to properly monitor its sales calls.

Swinton set aside £11.2 million to repay those customers who were mis-sold, of which £1.9 million has already been paid out. Swinton has contacted over 650,000 customers it thinks may have been affected. Any policy holders who believe they bought monthly cover as a result of mis-selling should contact Swinton directly.

Tracey McDermott, the FCA’s director of enforcement and financial crime, 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.

“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.”

Martin Wheatley, FCA chief executive said: “I recently told the insurance industry that we were taking a strong interest in the area of add-ons, and our first competition study will take a far-sighted view of the impact of current practice on consumers in this market.”

The market study will look at the nature of competition in these markets, in particular whether these products represent good value for money and whether consumers understand what they are getting with their policy.

The FCA found Swinton did not explain the cover clearly enough or tell customers the monthly policies were optional and separate from other core insurance products. It did not give enough information about the terms of the policy, including the conditions and limitations, and cancellation process. The nature of the failings, particularly poor sales scripts, meant that every sale could have been a mis-sale.

Swinton’s monitoring of its sales calls for these add-on policies was extremely limited both in scope and nature. There were no effective checks to ensure customers had been provided with adequate and balanced information and that the sale was fair.

During the period investigated, Swinton adopted a business strategy geared to boosting profits at each stage of the process – design, launch and sale. This strategy meant that it failed to ensure customers’ interests were put at the heart of its business.

The £7.38 million fine reflects the number and seriousness of the issues raised during the investigation. The substantial sum was reduced from £10,543,500, with a 30% discount applied as Swinton settled at an early stage in the FCA’s investigation.

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

Commonhold reform: Devil in the detail

The government's language on leasehold reform remains forthright. Ministers speak of, “bringing the feudal...

TMG reports record monthly MetLife submissions

TMG recorded its highest monthly submission volume with MetLife, exceeding its previous record by...

Leek raises earned income age limit to 75

Leek Building Society has introduced eight lending criteria changes covering income, contractors, later-life borrowing...

Coventry cuts residential and buy-to-let rates

Coventry for intermediaries has reduced selected residential and buy-to-let mortgage rates for new and...

Rely cuts buy-to-let rates by up to 25bps

Rely has reduced rates by up to 25 basis points across a range of...

Latest publication

Other news

Commonhold reform: Devil in the detail

The government's language on leasehold reform remains forthright. Ministers speak of, “bringing the feudal...

TMG reports record monthly MetLife submissions

TMG recorded its highest monthly submission volume with MetLife, exceeding its previous record by...

Leek raises earned income age limit to 75

Leek Building Society has introduced eight lending criteria changes covering income, contractors, later-life borrowing...