Fine was the largest ever imposed by the Financial Conduct Authority for mis-selling to retail customers in Britain
A chief executive whose firm was fined £30.6m fine last year for mis-selling insurance and mishandling complaints has become one of the Conservatives’ most generous donors of the election campaign. Richard Harpin, the head of the domestic insurance giant HomeServe, gave £50,000 to the party in the first week of the “short campaign”, according to electoral commission records released last Thursday.
In February 2014 HomeServe was handed a record fine by the Financial Conduct Authority [FCA] for bad practices including overcharging, misleading during telephone sales and failing to respond to customer complaints. The regulator was particularly concerned by the failings because many of the victims were of pensionable age and considered vulnerable. The fine was the largest ever imposed by the FCA for mis-selling to retail customers in Britain, beating a £28m penalty imposed on Lloyds Banking Group in December 2013.
Jon Ashworth, the shadow cabinet office minister, said the Tories should question whether it is right to accept a donation from an executive whose firm has received such a large fine. “We should be told what due diligence was done in advance of the Tories receiving this donation, and who knew what when,” he said.
The regulator found that between January 2005 and October 2011, HomeServe had mis-sold insurance policies and failed to investigate complaints adequately. During that period, pay to sales teams was structured to give staff incentives to increase the volume of products sold, irrespective of customers’ needs for the products. In addition, inadequate IT systems meant some customers were overcharged or paid for duplicate cover.
For three years between 2008 and 2011 the pay structure meant that people handling complaints were paid according to how many they closed, whatever the outcome for customers, the regulator said.
Meanwhile, the board and senior management of the company were also found to be “insufficiently engaged” with compliance matters. Harpin, 51, set up HomeServe in 1993 and now employs more than 2,500 people in Walsall, West Midlands. He has given a total of £375,000 to the Tories, while his wife Katherine has given £25,000.
A spokesperson for Harpin said: “Richard Harpin has been a supporter of the Conservative party for a number of years and his political donations are made in a personal capacity.”
The Conservatives earlier this week returned donations of more than £50,000 from a businesswoman whose husband was convicted of tax fraud in the US. Beatrix Tollman, the founder of a luxury hotel chain, gave £20,000 to the general election campaign earlier this month.
Her husband, Stanley Tollman, pleaded guilty by agreement to a single count of tax evasion for which he was sentenced to one day’s unsupervised probation in London, the Independent newspaper reported.
On Thursday afternoon, the commission will publish further details of donations received by political parties’ central HQs during the second week of the campaign up to 12 April.
A Conservative spokesman said:”‘All donations to the Conservative party are properly and transparently declared to the electoral commission, published by them, and comply fully with electoral commission rules.”
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