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UK's FCA fines The Carphone Warehouse over £29m (R559m) for insurance mis-selling

Publish date: 15 March 2019
Issue Number: 62
Diary: CompliNEWS
Category: Enforcement

The UK's Financial Conduct Authority (FCA) has fined The Carphone Warehouse £29,107,600 (R559 million) for failings that led to the mis-selling of ’Geek Squad’, a mobile phone insurance and technical support product. This follows an FCA investigation which stemmed from whistle-blowing reports.

The FCA found The Carphone Warehouse failed to give its sales consultants the right training to give suitable advice to customers purchasing Geek Squad. In particular, sales consultants were not trained adequately to assess a customer’s needs to determine whether Geek Squad was suitable. They were trained to recommend Geek Squad to customers who already had cover, for example through their home insurance or bank accounts. 

During the period under investigation (1 December 2008 to 30 June 2015), The Carphone Warehouse made regulated sales of Geek Squad policies worth over £444.7 million. A high proportion of these policies were subsequently cancelled early. For example, in January 2014, 35% of policies were cancelled within the first three months from inception. High cancellation rates are an indicator of a risk of mis-selling which The Carphone Warehouse failed to properly consider. 

Full FCA release here

Final Notice: The Carphone Warehouse Limited

Working Smart

By Lee Rossini

The term ‘business strategy’ is well-used in a business context, however, it is often misunderstood and not applied in an effective manner. Simply put, a business strategy refers to the game plan that the owners and managers of a business uses to position themselves in the market, to conduct business operations, to attract and satisfy clients, to compete successfully in its chosen marketplace and to achieve its stated business objectives (Thomson and Strikland, 2003).  In a nutshell, a business strategy focuses on the way in which a business gets from where it is to where it wants to be; the process involves identifying the right choices that must be made to overcome the challenges and difficulties along the way. 

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