For both personal and business use, it is crucial that consumers have a myriad of insurance policies to cover their day to day lives. Whether you are looking and short term loans or, indeed, phone contracts, you need a high level of coverage. But, what if the insurance you get is useless? In some cases, when a company sells insurance, it does not do all it can to fulfill the requirements of that service. When that happens, people can seriously lose out.
There are many regulatory services of which you ought to know. The FCA is quite possibly the most prominent, overseeing the role that financial companies play. There is also the PRA, which serves a similar role in these instances. Most consumers lack the necessary information to navigate confusing documents. That is why it is so necessary that we have a system in place to protect individuals in this situation. The regulatory services have a duty to protect people’s finances. They should ensure that only a responsible lender can operate on a wide scale in the UK.
One of the primary sectors in which people can lose out is the insurance business. The area is problematic to say the least. Each policy is subject to a broad range of clauses. These clauses help people to gain an understanding of how the coverage system works. If, at the initial point, the consumer fails to understand the policy, this could lead them to lose money. It is the duty of the insurance company to make sure that everything is 100% transparent when it comes to selling policies. If a company should knowingly mis-sell insurance, they are subject to the rules of the regulator.
Remember, the regulatory services consider it to be a failure on the part of the company when they misinform people. That in itself means that if a financial service fails to give people adequate information, they could get fines. These penalties act as a deterrent, seeking to prevent insecure transactions. That should stop people from wasting their money when they deal with big corporations. People have the right to affordable cash no matter what their circumstances are.The Cashfloat compliance team continually scrutinise cases about financial misconduct in the UK. Thereby, we can improve ourselves, as a company also regulated by the Financial Conduct Authority. As you already know, it is the duty of an affordable lender to follow the proper FCA code of conduct and uphold a high standard of work no matter what. The regulators act as watchdogs to make sure that the services companies are offering a high level of customer service. Both PRA and FCA work with a great many systems to ensure that private companies are conscious of the people that they serve.
The case of Phones 4U
Phones 4U are one of the leading mobile phone providers in the UK. The massive company serves the country and is responsible for a wide range of services. The company sells people phones, tablets and ongoing contracts and is a market leader. The business acts as the middle agent between mobile phone carriers and manufacturers. Since Midlands Mobile Sales relaunched under the name Phones 4U back in 1996, the company has soared to new heights.
Back in 2013, though, the watchdogs found that the company’s actions were not ideal. When you invest in a mobile phone policy, you usually get the option of adding an insurance policy to your bundle. Many people opt for this choice, fearing that if their phone breaks they will not have the cash to replace it. Usually, it is not the phone company that provides the insurance, but a third party company. In the case of Phones 4U, it was the Policy Administration Services (PAS) that offered a range of contracts to consumers.
After launching an investigation in 2013, the FCA found that PAS were not being as clear as they could be with their customers. They stated that it was “virtually impossible” to claim any compensation from the company. That means that when a customer did have an issue with their product, they were unable to do anything about it.
In fact, the watchdog found that the insurers were not giving customers a high level of service when they made a complaint. Much of the time, when consumers were filing complaints, the company failed to keep a record of the instance. Furthermore, the insurers did not investigate many customer complaints or resolve issues. The company ignored complaints about the mis-selling of policies. They informed customers that there was no way out of the agreement, since they had already set up a direct debit. Experts believe that the company was using technicalities within the documents. They used the small print to their benefit to avoid successful claims.
Range of compensation figures
Throughout the investigation, the FCA found that customers had an array of different complaints. PAS owed individual people anything from £10 to hundreds of pounds. That meant that it was difficult for the body to weigh up the total cost of the damages.
Fines and penalties
In July 2013, the FCA fined PAS £2.8 million. This fine was the first one the watchdog had ever issued to a mobile insurance company. The original fine was £4 million, but the company cooperated throughout the process, which got them a 30% discount.
Reviews and further action
After the report became public knowledge, both Phones 4U and PAS made public announcements about the issue. PAS have now apologised for the ways in which they dealt with customers. Between the period of June 2009 and September 2011, the company was responsible for many failings. The company stated that they have been working with a third party to review the situation. In 2013, they claimed that they had improved their processes since the incident. This statement is an attempt to show consumers that they are striving to be better.
This case was part of a national crackdown on mobile phone insurers in the UK. The FCA acted swiftly to ensure that the customers who needed action got the justice they deserved. Since then, the regulators have closely watched the actions of insurance companies. An instance such as this one tarnished the reputation of the majority of companies. That is why it is so important to combat the problem fast.