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The Financial Conduct Authority (FCA) has fined The Carphone Warehouse more than £29m for failings that led to the mis-selling of “Geek Squad”, a mobile phone insurance product.
Editor at Credit Strategy. Previously held roles at Accountancy Age, Accountancy Daily and the Leicester Mercury.
The regulator found that the retailer failed to train staff properly to advise customers buying the insurance. In particular, it found that sales consultants were not trained adequately to assess whether the cover was needed by the customer and instead were trained to recommend Geek Squad to customers who already had cover.
The FCA was tipped off by a whistleblower.
During the period under investigation, December 2008 to June 2015, The Carphone Warehouse sold Geek Squad policies worth over £444.7m.
A high portion of the policies were subsequently cancelled, it found. For example, in January 2014, 35 percent of policies were cancelled within the first three months from inception.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “The Carphone Warehouse and its staff persuaded customers to purchase the Geek Squad product which in some cases had little to no value because the customer already had insurance cover. The high level of cancellations should have been a clear indicator to the management of mis-selling.”
Carphone Warehouse said it has since introduced more comprehensive customer-needs assessments, enhanced colleague training and compliance monitoring, invested in customer service and post-sale customer satisfaction, and substantially increased the number of independent financial services coaches across the Carphone Warehouse store estate.
The company also said it has voluntarily carried out two customer redress programmes, covering complaints and cancellations.
Alex Baldock, Carphone Warehouse chief executive, said: “We’re obviously disappointed that Carphone Warehouse fell short in the past. But we’re a very different business today; as the FCA acknowledges, we’ve made significant improvements since 2015. We’re committed to stay on that trajectory, and to make sure all customers enjoy the right technology products and services for them.”
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