Published: Fri, March 15, 2019
IT | By Lester Massey

Dixons Carphone fined £29m for insurance mis-selling

Dixons Carphone fined £29m for insurance mis-selling

An investigation by the regulator, which covered the period from December 01, 2008 to June 30, 2015, found that sales consultants were not skilled to respond to customers who indicated that The Carphone Warehouse product Geek Squad may not be necessary or appropriate.

Handed to the retail giant by the Financial Conduct Authority (FCA), the fine relates to the mis-selling of its geek Squad services.

A "high proportion" of the policies sold to clients were subsequently cancelled early.

"The high level of cancellations should have been a clear indicator to the management of mis-selling", he said.

Meanwhile Steward thanked whistleblowers for bringing the retailer's practices to light.

When customers complained about the Geek Squad sales, Carphone Warehouse failed to investigate their complains, resulting in not upholding valid complaints where the product had been mis-sold and management not having "an accurate impression of indicators of mis-selling", the FCA said. "In the past few years, whistleblowers have contributed critical intelligence to the enforcement actions we have taken against firms and individuals".

Carphone Warehouse were found to have not given sales consultants enough training to tell whether customers were suitable for Geek Squad.

Sales staff were instead trained in "objection handling", with the focus being on overcoming customer objections rather than assessing whether the product was suitable for the customer. Customers who reckoned they might already be insured were advised to buy the policy and cancel in 14 days if they discovered they didn't need or want it, the FCA said.

Carphone Warehouse did not contest the FCA's findings.

"High cancellation rates are an indicator of a risk of mis-selling which The Carphone Warehouse failed to properly consider", according to the FCA. It has also invested in customer service and post-sale customer satisfaction, and substantially increased the number of independent financial services coaches across the Carphone Warehouse store estate.

In a statement, Dixons said it "accepts that in the past the company's practices fell short".

However, it said the FCA acknowledges that Carphone Warehouse has made "significant improvements" since 2015, and has carried out two customer redress programmes.

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