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Retailers
May 7, 2019
The £29 million fine follows a difficult last year for the retailer
Carphone Warehouse’s recent £29 million fine for misselling insurance has been described as “surprising and disappointing” by some industry sources after it was revealed that its staff had not been sufficiently trained.
The Financial Conduct Authority (FCA) found that the retailer has failed to advise customers who have bought Geek Squad mobile phone insurance.
A whistleblower tipped the FCA to probe Carphone Warehouse, which did not contest the findings – enabling it to avoid a higher fine of £41 million.
The period under investigation was between December 2008 and June 2015, during which time around £444.7 million of Geek Squad policies were sold. The FCA said a high proportion of policies sold were cancelled early.
Bastion Insurance director of sales John Fannon said the misselling scandal could give the wrong impression to consumers when buying insurance.
“It was disappointing to see a retail giant like Carphone fall foul of some basic principles of misselling,” he said. “You wouldn’t have expected it from them, so it was surprising.”
Carphone Warehouse CEO Alex Baldock says that Carphone Warehouse has made significant changes since 2015 to ensure there is no repeat, but Fannon says the situation highlights how crucial training is.
“It shows just how important the correct training for staff is, and as a regulated product it needs to be appropriately advised to consumers,” he said.
An example of the misleading advice, according to the FCA, is that staff were trained to suggest Geek Squad to customers who already had cover, either through their home insurance or bank accounts.
However, Coplus business development manager Bernie Nunn says he is unsurprised by the news.
“I think it’s quite an easy product to missell and it’s not too surprising from my point of view,” he said. “It’s an unfortunate reflection on the insurance industry when these long-standing errors come to light.”
CYBERATTACK
The fine follows a disastrous 2018 for Dixons Carphone, which announced 92 store closures and saw its shares fall, as well as nine million customers hit by a data breach and a fine for a cyberattack.
CCS Insight senior analyst Kester Mann said: “It feels like yet another blow to Carphone Warehouse, which has had a challenging time in recent months – not just financially, but also with its reputation.”