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The Financial Regulator, the FSA slaps £2.2m fine on Direct Line and Churchill

In May 2009, as part of its ongoing supervision of the RBS-owned direct insurers’ complaints handling, the FSA identified a number of areas where improvements needed to be made. This resulted in a review of closed complaint files.

A sample review of the files by a major accountancy firm showed that 28% of the 110 reviewed failed the assessment.

A detailed internal investigation conducted by the companies and a snap visit by the FSA in June 2010 uncovered that 27 out of the 50 files that had been sent to the watchdog had been altered before they were sent to the FSA.

In addition, seven internal documents were found to contain staff signatures forged by a member of staff. 

FSA acting director of enforcement and financial crime Tracey McDermott said: “This is a serious breach. The firms’ attempt to ensure that complete files were provided to the FSA backfired. The firms failed to give clear instructions, resulting in staff making inappropriate alterations, with one individual even forging the signatures of colleagues. The firms’ management did not know what changes had been made or when.

“In this case, the alterations did not impact on the FSA’s ability to do our job. The significant penalty is however intended to underscore to firms that it is of critical importance that material provided to the FSA must reflect the picture as it is – not as they might like it to be.”

RBS Insurance chief executive Paul Geddes said the findings of the FSA investigation had left the insurer feeling “much regret”.

“Although no customers were disadvantaged, we are very disappointed that we did not meet the standards we expect of ourselves and which the FSA expects of us,” he said.

“We acknowledge the shortcomings identified in the findings and since becoming aware of this issue well over a year ago have taken action to address these issues and to ensure we avoid such breaches in the future.”

 

Richard Anthony Oakes, Sharon Linda Oakes & Ashley Burton trading as Oakes Insurance Consultants are
authorised and regulated by the Financial Services Authority. Number 307170

Registered office: Oakes House, Derby Road, Long Eaton, Nottingham NG10 1PD