Yahoo Finance Swinton Insurance Fined £7m Over Mis-Selling
High street (BSE: HIGHSTREE.BO - news) insurance group Swinton has been fined more than £7m over mis-selling products to consumers.
The Financial Conduct Authority (FCA) said Swinton’s aggressive sales strategy meant that it failed to treat customers fairly in its telephone sales of monthly add-on insurance policies.
It said that 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 £92.9m.
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.
According to the FCA, the insurance firm has contacted over 650,000 customers it thinks may have been affected.
Swinton has over 500 branches across the UK, employs more than 3,000 people and has been operating for six decades.
Incorporated in 1963, it processes more than 2.5 million policies each year.
The City watchdog said any policyholders 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."
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 also failed to 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, the FCA said.
In response to the ruling Swinton chief executive Christophe Bardet apologised for the company's procedural policies.
Mr Bardet said: "We apologise for these shortcomings. They were not compatible with the proud history of Swinton, which since 1957 has been providing peace of mind to people through insurance cover.
"Our focus is now to deliver on our promise of insurance with a personal touch. Swinton is embarking on a £60m investment in growth which puts the customer at the heart of everything we do."
On its website Swinton said its customer service team aims to resolve general complaints within 20 days.
The £7.38m fine reflects the number and seriousness of the issues raised during the investigation, according to the FCA.
The sum was reduced from £10.54m, with a 30% discount applied as Swinton settled at an early stage in the FCA's investigation.
In 2009, Swinton was ordered to offer refunds to 350,000 customers over mis-selling of payment protection insurance.
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