UK's FCA fines The Carphone Warehouse over £29m (R559m) for insurance mis-selling
Publish date: 15 March 2019
Issue Number: 62
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.