Financial Conduct Authority hits Liberty Mutual Insurance with £5m fine for mobile phone insurance failings
The Financial Conduct Authority has today fined Liberty Mutual Insurance Europe £5.28m for failures in its mobile phone insurance claims and complaints handling process.
Liberty entered into a relationship in the UK with a third party to enable them to provide mobile phone insurance to retail customers.
The FCA found that between 2010 and 2015 customers were exposed to the possibility their complaints and claims would not be handled fairly.
Some claims were not investigated adequately or unfairly declined during the period.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Fair, effective, and prompt settlement of claims is a fundamental requirement of mobile phone insurance, and customers should expect that any claim they make, or any subsequent complaint they lodge, will be dealt with fairly. Insurers must put in place adequate measures to make sure that claims and complaints and handled fairly, especially where those functions are outsourced.”
Before the start of the FCA’s enforcement investigation, the third party provider undertook a remediation exercise in relation to claims which may have been unfairly rejected.
The total amount of redress offered to customers who may have suffered a loss was nearly £4m.
This was taken into account when calculating Liberty’s fine.
Additionally, Liberty settled at an early stage of the investigation and therefore qualified for a 30 per cent discount. Without the discount the fine would have been £7.5m.
Liberty said in a statement: “This fine from the FCA relates to activity undertaken by LMIE (our company market operation), under an arrangement which began in 2010, before the formation of Liberty Specialty Markets. Under this arrangement, a third party administered mobile phone insurance products on LMIE’s behalf. Several years ago certain issues came to light around some unfair outcomes for a very small proportion of customers (less than one per cent). These issues have been addressed and LMIE has worked with the third party to ensure that redress was paid to any customer who might have been affected. LMIE no longer sells mobile phone insurance to new customers.
"At Liberty Specialty Markets, we welcomed the FCA’s focus on coverholder oversight, and responded by setting up a new, best in class conduct function. This ensures that Liberty’s ethos of doing the right thing and putting the customer at the heart of everything we do, is put into practice effectively across all of our product lines and coverholder arrangements.”