Dixons Carphone incurs £29.1 million fine due to insurance mis-selling
The Financial Conduct Authority has fined Dixons Carphone £29.1 million after it concluded that the company’s Carphone Warehouse business did not meet expected standards for its Geek Squad mobile phone insurance selling processes.
The fine includes a discount for early settlement.
In a statement the FCA said: “The FCA found The Carphone Warehouse failed to give its sales consultants the right training to give suitable advice to customers purchasing Geek Squad. In particular, sales consultants were not trained adequately to assess a customer’s needs to determine whether Geek Squad was suitable. They were trained to recommend Geek Squad to customers who already had cover, for example through their home insurance or bank accounts.”
Mark Steward, executive director of enforcement and market oversight at the FCA, added: “The Carphone Warehouse and its staff persuaded customers to purchase the Geek Squad product which in some cases had little to no value because the customer already had insurance cover. The high-level of cancellations should have been a clear indicator to the management of mis-selling.
“Without whistleblowers coming forward these practices may never have come to light. In the past few years, whistleblowers have contributed critical intelligence to the enforcement actions we have taken against firms and individuals.”
During the period under investigation, which ran from 1 December 2008 to 30 June 2015, Carphone Warehouse made regulated sales of Geek Squad policies worth over £444.7 million.
Dixons Carphone said it has worked closely with the FCA throughout the investigation and accepted that the company’s past practices “fell short”. It also said that it has made improvements to its processes including the introduction of more customer-needs assessments, improved staff training and compliance monitoring. In addition, the company has invested in customer service and post-sale customer satisfaction, and increased the number of independent financial services coaches across the Carphone Warehouse store estate.
Alex Baldock, group chief executive of Dixons Carphone, added: “We’re obviously disappointed that Carphone Warehouse fell short in the past. But we’re a very different business today; as the FCA acknowledges, we’ve made significant improvements since 2015. We’re committed to stay on that trajectory, and to make sure all customers enjoy the right technology products and services for them.”
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