More Financial Mis-Selling: FCA Rules Against Swinton Insurance

The long running, and still ongoing, PPI mis-selling scandal just does not seem to go away. Despite criticism and reports from the former FSA, despite paying out millions in compensation, financial institutions are still being called to account over this long running scandal.

The latest disclosure was the Financial Conduct Authority’s (the financial services industry regulatory watchdog that took over from the FSA) recent action over Swinton Group Ltd, one the UK’s largest insurance providers.

In a scathing judgement, the FCA found that between April 2010 and April 2012 Swinton, in selling a variety of insurance policies to thousands of customers, had aggressively marketed and sold optional ‘add ons’ to policies (such as personal accident coverage or motor breakdown policies). Customers were not informed at the time that such ‘add ons’ were optional. Indeed, it was found that key terms of insurance policies were not fully explained to customers, and that sales calls were not properly recorded. Such aggressive and profit orientated selling had generated an extra £92 million for the Swinton Group between 2010 and 2012.

As such, the FCA found that Swinton had failed to put the customers’ interests first, instead seeking to boost company sales and profits, and fined the insurer £7.38 million. In addition, Swinton will also be compensating all customers affected, at a cost estimated at £11 million.

In the judgement, the FCA stated that “Swinton adopted a business strategy geared to boosting profit at each stage of the process – design, launch and sale. This strategy meant that it failed to ensure customers’ interests were put at the heart of its business.”

According to a blunt statement from FCA enforcement chief Tracey McDermott “Swinton failed its customers… When selling monthly add-on policies, Swinton did not place the customer at the heart of its business. Instead it prioritised profit… At the FCA we have been clear in our expectation that firms must behave in the interests of consumers.”

The ruling comes after Swinton had written to all 650,000 customers who were affected last year, and paid out £1.9 million in compensation. Swinton (having already been fined £770,000 in 2009 for PPI mis-selling) has been cooperative with the FCA throughout the investigation, and has taken part in an FCA study concerning the best way to write compensation letters. Taking that into account, along with Swinton agreeing to settle at an early stage, the FCA gave the insurance company a 30% reduction.

In response to the ruling, Swinton Group chief executive Christophe Bardet, apologised for these ‘shortcomings’.  Apparently, “They were not compatible with the proud history of Swinton.”

FCA chief executive Martin Wheatley has recently launched a review into the insurance sector’s activities over insurance policy ‘add ons’. In addition to insurance companies, polices sold by train companies, airlines and electrical retailers to cover their core services and products will also be examined, over concern that such ‘add on’ policies are little more than extra mechanisms to generate profit, as opposed to protecting the consumer.

A firm ruling against Swinton’s actions- along with the reduction for cooperation- sends a clear signal to the industry regarding Mr. Wheatley’s review that will be “taking a strong interest in the area of add-ons.”  Their first study of competition will be examining the impact of current practices on consumers in this very market.

For information on claiming back your mis-sold PPI premiums, visit

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