Phones 4 U mobile insurance company fined for not dealing with customer complaints
Is your mobile phone insured? The monthly cost of insurance can be pretty hefty, but at what personal cost if you lost or broke your phone and didn’t have the cash to replace it?*
In 2012/13, the financial ombudsman tackled 615 new complaints about mobile phone insurance, finding in favour of consumers in 71% of cases. Concerns over wildly varying costs, and what the policies cover, as well as insurers weaselling out of paying claims have made mobile phone insurance one of the hottest consumer bugbears. The small print in some contracts was found, as part of an investigation by the Financial Conduct Authority (FCA), to make it "virtually impossible" to claim.
Now, as part of the FCA crackdown, one such insurer, allied to the Phones 4 U chain, has been heavily criticised (not very exciting) and slapped with a massive £2.8m fine (a bit more impressive) for its behaviour on mobile phone insurance contracts.
Insurance intermediary Policy Administration Services (PAS), which runs Phones 4 U's insurance policies as well as customer complaints relating to those policies was fined £2.8m for its failings in dealing with customer complaints between June 2009 and September 2011.
The FCA found that PAS failed to get to the root cause of complaints and did not treat customers fairly. PAS did not properly record complaints, or investigate them in a consistent manner, and misselling complaints were often rejected just because the consumer had signed a direct debit form.
PAS has now conducted “a review” to recompense customers who have been left out of pocket owing to its failings. Out of 7,099 complaints, 1,438 customers have been paid compensation estimated to be between £10 and £100.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “PAS had wide ranging failures across its complaints handling processes - it failed to investigate complaints properly or to keep accurate records. This is simply not good enough - it does not meet our requirements and does not meet the needs of customers.
"Last week we published the findings of a review into mobile phone insurance which found that sometimes there was a gap between what customers expect, and what they are really getting. There are common themes in this case that revolve around consumer expectations and how they are sometimes being treated in practice. That review publication and this final notice stand side by side and I wholeheartedly recommend that all insurance firms – not just those in the mobile phone insurance market - read the two together.”
Richard Lloyd, that bloke from Which! said: “It's good to see the Financial Conduct Authority stepping up their action against companies that are failing to deal with consumer complaints about mobile phone insurance…There must be substantial fines to act as a proper deterrent, along with strong action against individuals who have broken the rules.
He added, "any consumer who thinks their complaint was not handled correctly should first resubmit their complaint and then take it to the Financial Ombudsman Service if they are not happy with the response."
* you may be able to claim on your home insurance policy. Which is probably a lot cheaper than mobile phone insurance, but might not guarantee a new for old replacement.