Swinton, the biggest high street insurer in the UK, has been fined £7.4 million by the Financial Conduct Authority (FCA) for mis-selling insurance add-ons to customers.
The insurer has set aside £11.2 million to repay those customers who were mis-sold. But so far only £1.9 million has been paid out to 35,000 dissatisfied customers out of a total 650,000 people it originally thought could have been affected, a Swinton spokesperson told Moneywise.
This amounts to an average £55 for each dissatisfied customer. However, that leaves Swinton with £9.3 million left in the compensation kitty.
Swinton told Moneywise that the remainder of the money “remains in reserve” because under FCA rules customers can make a claim even if they previously said they were satisfied.
The regulator said that Swinton’s aggressive sales strategy resulted in a failure to treat customers fairly during telephone sales of personal accident, home emergency and motor breakdown policies between April 2010 and April 2012.
Swinton was found not to have explained policies clearly enough or to have told customers the monthly policies were optional and separate from other insurance policies they already had.
It also did not give enough information about the terms of the policies – including their limitations and the cancellation process – and failed to properly monitor its sales calls.
Tracey McDermott, director of enforcement and financial crime at the FCA, said: “Swinton failed its customers. When selling monthly add-on policies, Swinton did not place the consumer at the heart of its business. Instead it prioritised profit.”
In a statement, Swinton said that it acknowledges the shortcomings in its sales practices during this period, and “unreservedly apologises to customers”.
Chief executive Christophe Bardet added: “Our focus is now to deliver on our promise of insurance with a personal touch. Swinton is embarking on a £60m investment in growth which puts the customer at the heart of everything we do.”
The FCA is currently conducting its first competition study into the insurance market to find out how it treats consumers, whether products represent good value for money and whether consumers understand what they are getting with their policy.
Earlier this month, shoddy complaints handling by the company that oversees customer services for those buying mobile phone insurance through Phones4U resulted in a £2.8 million fine by the regulator.
The Swinton customers affected should already have been contacted by the company but anyone else who thinks they may have been mis-sold should get in touch with their local branch.