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FCA fines LBGI £90m for communication failures

The Financial Conduct Authority (FCA) has fined Lloyds Bank General Insurance (LBGI), St Andrew’s Insurance, Lloyds Bank Insurance Services and Halifax General Insurance Services Limited) £90m for failing to ensure language in home insurance renewals communications was clear.

According to the regulator, between January 2009 and November 2017, LBGI sent nearly nine million renewal communications to home insurance customers which included language to the effect that they were receiving a “competitive price” at renewal. The FCA said that LBGI did not substantiate the “competitive price” language.

 

Mark Steward, executive director of enforcement and market oversight at the FCA said: “Firms must ensure their communications with customers are clear, fair and not misleading. LBGI failed to ensure that this was the case. Millions of customers ended up receiving renewal letters that claimed customers were being quoted a competitive price which was unsubstantiated and risked serious consumer harm.”

 

Separately, the FCA said LBGI informed approximately half a million customers that they would receive a discount based on either their “loyalty”, on the fact they were a “valued customer”, where the described discount was not applied and was never intended to apply. This affected approximately 1.2 million renewals, with approximately 1.5 million communications sent by LGBI.

 

LBGI has voluntarily made payments of approximately £13.5m to customers who received communications that referred to the application of a discount when none was applied. The FCA said this has been taken into account in the assessment of the financial penalty.

 

LBGI is contacting customers proactively, meaning customers do not have to take any steps to receive payment.

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