Carphone Warehouse has been hit by a £29 million fine after the UK’s financial watchdog said it had mis-sold insurance to its customers.
The Financial Conduct Authority (FCA) found that the mobile phone retailer had encouraged customers to to sign up to its Geek Squad insurance even if they already had alternative cover.
Mark Steward, the executive director of enforcement and market oversight at the FCA, commented on the decision:
“The Carphone Warehouse and its staff persuaded customers to purchase the Geek Squad product, which in some cases had little to no value because the customer already had insurance cover. The high level of cancellations should have been a clear indicator to the management of mis-selling.”
According to the investigation, which covered the period of 1 December 2008 and 30 June 2015, the FCA found that Carphone Warehouse sold £444.7 millions worth of Geek Squad policies to its customers.
In addition, the FCA said a large portion of these plans were subsequently cancelled,
“High cancellation rates are an indicator of a risk of mis-selling which The Carphone Warehouse failed to properly consider,” The FCA said.
Current Dixons Carphone chief executive Alex Baldock, commented on the news:
“We’re obviously disappointed that Carphone Warehouse fell short in the past. But we’re a very different business today; as the FCA acknowledges, we’ve made significant improvements since 2015. We’re committed to stay on that trajectory and to make sure all customers enjoy the right technology products and services for them.”
Baldock has been chief executive of Dixons Carphone as of April of 2018.
Dixons Carphone was formed following a merger between electrical retailer Dixons and Carphone Warehouse in 2014. It is London-listed, and a constituent of the FTSE 250 Index.
Shares in the company (LON:DC) are currently down marginally at -1.05% as of 12:34PM (GMT).