| FSA fines insurer Guardian for mishandling customer complaints |
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LONDON: Britain's Financial Services Authority has fined insurance company Guardian Assurance and associate company, Guardian Linked Life, 750,000 pounds for mishandling complaints from its endowment policyholders.
This is the fourth time that the FSA has fined an insurer for failing to deal with complaints properly. The regulator described Guardian's complaints procedure as flawed, as a result of which 5,600 customers had their complaints wrongly rejected, leading possibly to loss of compensation.
FSA's director of enforcement Margaret Cole said the insurer failed to treat its customers fairly by exposing those with a valid complaint to the risk that their complaint could be rejected inappropriately. "Consequently, they may not have received the compensation to which they were entitled. These failings exposed a high number of consumers to potential financial loss."
Guardian is understood to have sold some 233,000 endowment policies between 1988 and 1995 before it stopped marketing them. It had received some 20,000 complaints from April 2000 to end of 2004 and in order to cut costs, the company had introduced a streamlined system.
It is estimated that between January 2003 and the end of 2004, the company had improperly rejected 5,600 complaints out of nearly 12,000 it had received. At one stage it was rejecting more than three quarters of all its complaints. On the basis of a management consultant's opinion the company changed its procedure in 2004, but it did not fully comply with FSA guidelines.
An FSA spokesperson said the procedure adopted by the insurer led to complaints being dismissed if the customer understood and accepted the risk that the policy might not repay the sum assured. But there could be other reasons for accepting the complaint.
The company has now agreed review all the rejected complains and to make good losses if any suffered by the customers.
Guardian Assurance and Guardian Linked Life are now part of Dutch insurance company Aegon.
FSA had earlier fined Friends Provident 675,000 pounds, Allied Dunbar 725,000 pounds and Abbey National 800,000 pounds.
Posted
on : Fri, 13 Jan 2006 20:25 GMT | Insurance News
By : Chris Rowe
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