FCA fines Stonebridge Insurance £8m for mis-selling accident plans

Almost half a million customers across Europe now in line for compensation over sales made between 2011 and 2012

　

The FCA says Stonebridge 'put up barriers' to customers trying to cancel their policies. Photograph: Graham Turner for the Guardian

An insurance company has been fined more than £8m by the City regulator for mis-selling personal accident plans, which means over 480,000 householders could now be in line for compensation.

Sales staff at Stonebridge International Insurance, part of insurance giant Aegon, targeted low and middle income customers without college degrees or professional qualifications by selling them expensivepersonal accident, accidental death and accidental cash plan insurance products, the Financial Conduct Authority said. The company would then use separate staff to contact the customers to ensure that they didn't cancel their policies.

Stonebridge bought customer details from business partners, including UK banks and credit card companies, catalogue sales firms and online retailers and used outsourced call centres to contact these people. The business partners would then receive a percentage of the monthly premiums.

This mis-selling went on between April 2011 and December 2012.

"Customers are entitled to expect firms to provide them with fair and balanced information to enable them to make the right choices about the product that is right for them," said Tracey McDermott, FCA director of enforcement and financial crime. "Stonebridge failed to do this and, when customers tried to cancel, put up barriers to prevent them from doing so. Firms must take responsibility for their outsourcing arrangements and ensure that they treat customers fairly."

The FCA has fined Stonebridge £8.4m and estimates that up to 486,444 customers across the UK and EU could be affected. Stonebridge, which has already paid out redress worth £400,000 to affected customers in the UK, is now contacting all of its existing customers across the UK and Europe and will pay some or all of the premiums back to those affected with interest.

The products were sold over the phone to retail customers in the UK, Germany, France, Italy and Spain and those in the UK were sold either the company's Accidental Death Plan, the Accident Cash Plan or the Personal Accident Plan. These were designed either to pay relatives of the policyholder if the policyholder died due to an accident; pay customers a fixed amount of money each day if they were unable to work or look after their family; or pay out a range of fixed amounts for death, hospitalisation and accidental injuries. For family cover on any of these policies the average monthly premium varied between £7 and £13.

"We regret these failings and take our responsibilities to customers very seriously," a spokesman for Stonebridge's parent group, Aegon, said. "We stopped writing new telesales business in the UK in December 2012 and have since ceased all contracts with the business partners we were working with. We have also replaced all the executive management team at Stonebridge."

A statement on the Stonebridge website said: "The notice [from the FCA] does not impact the day to day operations of Stonebridge and we remain a solvent trading company. We will continue to service our clients as usual. We will meet our obligations to our customers by providing claims and customer services to meet the expectations of our policyholders."




Source: The Guardian