An FSA investigation found that between January 14 and October 24, 2005 The Carphone Warehouse failed to send 118,000 customers, who had bought mobile phone insurance through its telesales channel, a statement of demands and needs (SDN) in written form. It was subsequently discovered that 56,000 of those customers also did not receive a policy summary setting out its main features.
This was considered a serious failing by the FSA as both documents contain important information that helps consumers understand the policy they are buying.
The Carphone Warehouse Ltd failed its telephone sales consumers by not giving them all the information necessary for them properly to understand the insurance product they had bought. Customers were therefore exposed to the risk of being left with an insurance policy which was unnecessary or provided incomplete cover leading to rejected claims. In either case they could suffer some degree of financial loss, said Sarah Wilson, director of retail firms at the FSA.
The level of the fine also reflects the firm’s failure to notify the FSA of the problems in its telesales distribution channel in a timely manner. This was considered to be a breach of the FSA’s principle which requires firms to disclose to the FSA anything about their business of which the FSA would reasonably expect notice.
