Massive fine for insurance broker over cancelled policies
September 14, 2008 by admin
Filed under News, News-Insurance
A well known insurance company has been accused of treating customers unfairly, and as a result has been fined £735,000 by the Financial Services Authority, the UK’s financial regulatory body. The insurance firm, Hastings Insurance Services Ltd, was found to have cancelled the policies of customers after finding that the cover had been sold to the customers too cheaply due to a computer error.
According to reports a glitch in the computer system resulted in cover being sold to many customers at a lower price than it should have been, but after the insurance firm found out that this had happened it cancelled around 4550 policies where consumers had been sold cover at less than the standard policy price. The incident occurred in June and July of last year.
The industry watchdog said that the insurance firm had failed to look at other alternatives, and had simply gone ahead and cancelled the cover. One official from the FSA said that the insurance firm had not taken into consideration the impact that the cancellation of the policies would have on affected customers. She said: “It is clear from our investigation that Hastings put its own interests ahead of those of its customers.”
According to reports some of the policies had worked out to over £500 cheaper than they should have been. Reports shows that the affected customers were forced to take out new car insurance policies at short notice, and many had not earned any no claims discount for the time that they had held the policies. Although the fine for Hastings was due to be over £1 million it was reduced because the firm agreed to settle early.
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