The Financial Conduct Authority (FCA) has fined Stonebridge International Insurance Limited (Stonebridge) £8,373,600 in relation to sales of accident insurance products.
Between April 2011 and December 2012, Stonebridge targeted low and middle income customers without college degrees or professional qualifications, with its personal accident, accidental death and accidental cash plan insurance products. Outsourcing companies sold policies over the telephone, with those responsible for sales, encouraging people to buy more expensive products, whilst companies responsible for post-sale support actively discouraged customers from cancelling their policies.
Tracey McDermott, FCA director of enforcement and financial crime said:
"Customers are entitled to expect firms to provide them with fair and balanced information to enable them to make the right choices about the product that is right for them. Stonebridge failed to do this and, when customers tried to cancel, put up barriers to prevent them from doing so. Firms must take responsibility for their outsourcing arrangements and ensure that they treat customers fairly."
The products were sold over the phone to retail customers in the UK, Germany, France, Italy and Spain, with lists of potential customers provided by Stonebridge’s business partners, including catalogue sales firms, online retailers, banks and credit card companies. In return, Stonebridge paid the firms a percentage of the premiums.
The FCA found that the telesales scripts that Stonebridge designed for its outsourcing companies did not provide clear, fair and balanced information. It also found that Stonebridge’s poor systems and controls, and inadequate oversight of its outsourcing companies breached the FCA’s requirements that firms treat customers fairly and have appropriate systems and controls in place.
Stonebridge is carrying out an independent review of its past sales in the UK and EU. Up to 486,444 customers across the UK and EU could be affected. Stonebridge is contacting affected customers to determine whether they should be compensated as a result of its poor sales practices.
Stonebridge has already paid redress worth a total of £400,000 to affected customers in the UK.
The FCA has a statutory objective to secure appropriate protection for consumers.
Notes for editors
- Final Notice - Stonebridge International Insurance Limited[1].
- Information on the products:
- Accidental Death Plan allowed relatives of policy holders to receive a lump sum if the policy holders died as a result of an accident. The average monthly premium for the policy during the Relevant Period was £6.19 for single cover and £8.76 for family cover.
- The Accident Cash Plan enabled customers to receive a fixed amount of money each day if they were unable to work or look after their family. The average monthly premium for the policy during the Relevant Period was £7.17 for single cover and £11.12 for family cover.
- The Personal Accident Plan provided a range of fixed amounts for death, hospitalisation and accidental injuries. The average monthly premium for the policy during the Relevant Period was £6.35 for single cover and £12.93 for family cover.
- On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[2].