FCA has publicly censured a firm that sold extended warranty insurance and ordered it to pay customers compensation of nearly £400,000. It would have imposed a fine of nearly £1m had it not been for the extreme financial hardship of the firm.
Alsford Page & Gems Limited is a broker and sold the policies between 2013-2016. The sales of extended warranties on goods such as household appliances, to retail customers, was a move away from its standard business model. The firm used 6 appointed representatives to make the sales. FCA found the firm had not sufficiently considered or addressed the risks of selling these products to retail customers and had “wholly inadequate” systems and controls as it had very limited and ineffective oversight of its ARs. As a result of the failings, FCA found the firm could not know whether its customers were being treated fairly or whether the products met their needs and the customers understood them. It was particularly concerned that there were no controls to protect vulnerable customers.
The firm is now under new senior management, and the compensation, which is equivalent to the brokerage fees it earned, is being paid by its holding company. All customers who bought a policy during the relevant period from one of the firm’s ARs will be eligible for a payment.