UK finance regulator issues £2.8m fine for poor complaints handling

UK financial regulator the Financial Conduct Authority (FCA) has fined Policy Administration Services (PAS) £2.8m for poor complaints handling of mobile phone insurance policies sold by Phones 4u between June 2009 and September 2011.

PAS is an insurance intermediary administering mobile phone insurance policies sold by Phones 4u.

During its investigation, which was begun by the Financial Services Authority, the FCA found significant failings in the way PAS handled complaints. Underlying all of the failings was PAS’s failure to record complaints, meaning that management information and regulatory reporting was wrong.

Other serious shortcomings revealed during the investigation included the following:

  • Complaints were not investigated fully or resolved appropriately or consistently;
  • Complaints about mis-selling were often rejected just because the customer had signed a Direct Debit form, but it was not clear why PAS thought this alone indicated a valid sale; and
  • The failure to investigate and address the root-cause of complaints about the sale of insurance policies, such as mis-selling.

Taken together these failings meant that PAS was unable to treat customers fairly and come to a balanced decision about whether or not complaints had substance. Nor was it able to accurately detect areas that were repeatedly being complained about so it could put them right and improve its customers’ experiences. These standards are expected of all regulated firms and are designed to ensure that when problems do occur, they are quickly identified and corrected.

Since the investigation, PAS has employed a third party to review its complaints process, and has itself reviewed 7,099 complaints and paid compensation to 1,438 customers.