Insurance giant Swinton has been fined £7.4 million by the City watchdog for mis-selling “add-on” policies to as many as 650,000 customers throughout the UK.
The Financial Conduct Authority (FCA) said Swinton had set aside £11.2 million to repay customers, due to an “aggressive” sales strategy which prioritised profit over consumers’ interests.
It found that Swinton failed to provide enough information for customers and properly monitor phone calls when selling personal accident, home emergency and motor breakdown policies between April 2010 and April 2012.
The policies generated an income of £92.9m but Swinton did not explain the cover clearly enough or tell customers the monthly policies were optional, the FCA found.
The company also failed to give enough information about the terms of the policy, including the conditions and limitations, and cancellation process.
The FCA probe found the nature of the failings and poor sales scripts meant that “every sale could have been a mis-sale”.
Swinton unreservedly apologised to customers and said it had changed its sales script and improved its monitoring process.
The company said it had contacted more than 650,000 customers who may have unwittingly been caught up in the scandal and had repaid a total of £1.9m to customers who were mis-sold products.
Any policy holder who believes they bought monthly cover as a result of mis-selling is being advised to contact Swinton directly to inquire about compensation.
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 total fine of £7,380,400 includes a 30% discount as Swinton settled at an early stage of the investigation.
Chief executive Christophe Bardet said the company was investing £60 million to grow the business in the UK and promised that customers would be at the heart of its operation in future.
He 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.
“As the biggest high street insurance retailer in the UK, with 500 branches, we are part of the community for more than two million customers. Our focus is now to deliver on our promise of insurance with a personal touch.”