Sarah Wilson, director of Retail Firms at the FSA said: ‘The Carphone Warehouse Ltd failed its telephone sales consumers by not giving them all the information necessary for them properly to understand the insurance product they had bought. Customers were therefore exposed to the risk of being left with an insurance policy which was unnecessary or provided incomplete cover leading to rejected claims. In either case they could suffer some degree of financial loss.’
Carphone Warehouse broke the rules of selling insurance over the telephone between January and October 2005. It continued selling the insurance for a further seven months last year, even though it had already been made aware that the rules were being broken.
The company were angry with landing the fine, stating the FSA had used "a sledgehammer to crack a nut. Carphone also claimed the fine was "surprising and disproportionate". Charles Dunstone, Carphone CE, said its customers had not suffered and he had expected "more tolerance" from the FSA.
Dunstone added "We take every aspect of service and administration very seriously." and believed no customers had suffered as a result of the non-compliance, which had happened just a few months after it became regulated.
Carphone Warehouse did agree to send out the missing documents and conduct an extensive review to prevent consumers suffering again. The fine was reduced by the FSA by 30% after the company agreed to settle the case early.
FSA director of retail firms Sarah Wilson said: "The FSA’s general insurance rules have been put in place to provide an appropriate level of consumer protection. Firms must treat their customers fairly."