The Carphone Warehouse pays £245,000 fine for insurance sales breaches

Highstreet mobile phone retailer, The Carphone Warehouse, failed to send a Statement of Demands and Needs (SDN) in durable format (ICOB 4.4.1 and 4.4.2 (2)) to 118,000 customers, who bought phone insurance through its telesales channel in the period 14 October to 24 October 2005. It also omitted to send a policy summary to 56,000 of these customers in breach of ICOB rules 5.3.8 and 5.3.6. The firm has been fined £245,000 for the conduct, which the FSA deems fell below the requisite standard for Treating Customers Fairly. Although the firm learned of the SDN fault in March 2005, it did not take immediate steps to rectify its sales process. In October last year, external consultants advised that the FSA had to be told of the problem at which point further internal investigation revealed systems and controls weaknesses which meant that policy summaries had also not been sent to some telesales customers. In failing to notify the FSA promptly of the defects the firm contravened the requirement to provide the regulator with complete and timely information (Principle 11).