FCA fines Carphone Warehouse £29 million

15 March, 2019, 14:55 | Author: Sammy Rose
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The high level of cancellations should have been a clear indicator to the management of mis-selling.

Instead they were trained in so-called spin selling, where customers were pushed to buy the insurance, and on "objection handling" to overcome customer scepticism, rather than assessing whether the product was actually right for those customers.

The regulator said that Carphone Warehouse, which is part of the merged Dixons Carphone retailer, had failed to provide its sales consultants with the right training to give suitable advice to customers purchasing Geek Squad mobile phone insurance.

Carphone Warehouse made regulated Geek Squad policy sales worth more than GBP 444.7 million during the period under investigation (01 December 2008 to 30 June 2015).

The FCA said a high proportion of these policies were subsequently cancelled early.

The watchdog carried out an investigation after being alerted by whistleblowers - without whom "these practices may never have come to light".

Carphone Warehouse agreed to the findings and did not appeal the case, as well as setting aside £2.3m in compensation to roughly 28,000 customers who had been sold the Geek Squad policies, leading to £948,777 in refunds in 2016. "In the past few years, whistleblowers have contributed critical intelligence to the enforcement actions we have taken against firms and individuals".

British electrical goods retailer Dixons and mobile phone group Carphone Warehouse agreed on Thursday to merge creating a European leader in
A man looks at his mobile phone as he walks past a Carphone Warehouse store in central London

The watchdog said 35% of insurance policies were cancelled in the first three months, an indicator of mis-selling.

"This created a risk that customers would purchase insurance that they did not need and would be exposed to the risk of paying for it if they did not cancel in time", the FCA said.

According to Retail Gazette, the FCA said the retailer "failed to properly investigate and fairly consider customer complaints".

In a statement, parent company Dixons Carphone said that it had worked closely with the FCA during the investigation and accepts that its practices "fell short" in the past. But we're a very different business today; as the FCA acknowledges, we've made significant improvements since 2015.

The penalty comes after parent firm Dixons Carphone revealed past year it had suffered a massive data breach affecting the records of millions of its customers.

Carphone Warehouse, Britain's biggest mobile phone seller, merged with electricals retailer Dixons in 2014.

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