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'Simply not good enough', snarls regulator

Application security programs and practises

A firm that sells mobile insurance to Phones 4u customers has been smacked with a fine of almost £3million for ignoring customer complaints.

The Financial Conduct Authority (FCA) fined Policy Administration Services Limited (PAS) £2,834,700 for "poor complaints handling" between June 2009 and September 2011. The accusations hinge upon a failure to record customer grumbles, which resulted in no action being taken and a raft of furious phone owners.

The FCA's investigation found that complaints were not investigated or "resolved appropriately".

The failure to record complaints meant that recurring problems such as the mis-selling of insurance policies were not identified and dealt with.

The FCA said PAS "was unable to treat customers fairly and come to a balanced decision about whether or not complaints had substance".

So far, PAS has received 7,099 complaints and paid out compensation to 1,438 customers.

Tracey McDermott, the FCA’s director of enforcement and financial crime, said:

“In any business things can go wrong. Where it does it is in the interests of both consumers and firms to put it right. Proper complaints handling is essential to ensure customers are treated fairly. It is also a key tool to help firms identify where things are not working as they should and allow them to take steps to put problems right themselves. Where this is done effectively it not only means a better relationship between firms and their customers but also avoids the cost and reputational damage of regulatory action.

“PAS had wide ranging failures across its complaints handling processes - it failed to investigate complaints properly or to keep accurate records. This is simply not good enough - it does not meet our requirements and does not meet the needs of customers."

The findings came a week after a FCA review into mobile phone insurance, which found that customers were often let down by unfair terms which did not allow them to make claims.

McDermott added:

"Last week we published the findings of a review into mobile phone insurance which found that sometimes there was a gap between what customers expect, and what they are really getting. There are common themes in this case that revolve around consumer expectations and how they are sometimes being treated in practice."

PAS has now employed an external firm to help sort out its complaints procedures. The firm settled the case at an early stage, resulting in the fine being discounted by 30 percent. Without this, PAS would have had to pay £4,049,637.

Phones 4U issued a statement on behalf of PAS which said:

"We apologise for those failings and have compensated the 1,438 affected customers. We engaged an independent third party to undertake a comprehensive review, and our processes were considerably improved in 2011 to ensure such failings do not occur again.

"We have been open and co-operative with the FCA to fully address the issues raised by its investigation, and we continue to work with the FCA to promote high standards of regulatory conduct within the industry." ®

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