FCA has fined the Carphone Warehouse over £29 million for misselling its “Geek Squad” mobile phone insurance and technical support product, and acting in breach of its Principles 3,6 and 9. Following whistleblowing reports, FCA investigated and found the firm did not give its sales staff the right training to enable them to assess customers’ needs or give customers suitable advice about the product. Worse, they were trained to recommend it to customers who already had cover as part of other arrangements. The training did not cover responses to customers who indicated the policy might not be appropriate and encouraged staff to tell customers who said they may have a product or wanted time to consider, just to buy the product and then cancel within 14 days.
The practice continued for over 6 years, and in that time policies worth over £444.7m were sold, and many were cancelled early (which is an indicator of misselling – and which the firm failed to consider).
When customers complained, the complaints were not investigated and considered fairly and properly, so that many valid complaints were not upheld and this meant management did not have an accurate picture of the misselling.
The firm did not dispute the findings, but asked the RDC to assess the appropriate sanction. The fine would have been over £40m had it not accepted FCA’s findings. The fine also took into account the fact that the firm has undertaken redress schemes to customers whose complaints were unfairly rejected or who cancelled their policy for reasons that indicated the potential misselling, and that it has now made significant improvements to its approach to regulatory matters.