Dixons Carphone fined £29.1m for mis-selling mobile insurance
The Financial Conduct Authority has fined Dixons Carphone £29.1 million for mis-selling a mobile phone insurance and technical support service, known as “Geek Squad”.
The City watchdog said the company trained staff at its Carphone Warehouse business in “spin selling” the insurance product to customers who already had insurance cover and in “objection handling” of focusing on customer protests rather than assessing whether the product was suitable for them.
It said the firm also failed to properly investigate and fairly consider customer complaints.
The investigation, which was triggered by a whistleblower, found that Carphone Warehouse made sales of more than £444.7 million from Geek Squad between 2008 and 2015.
The FCA said that 35% of the insurance policies were cancelled within the first three months of buying them, which is a key indicator of mis-selling.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “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.
“Without whistleblowers coming forward, these practices may never have come to light.”
Dixons Carphone said it has made improvements in response to the probe such as enhancing staff training and compliance monitoring, investing in customer service and increasing the number of independent financial services staff in Carphone Warehouse stores.
The company has also carried out two customer redress programmes to sort out complaints and cancellations.
Dixons Carphone chief executive Alex Baldock said: “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.”
As Dixons Carphone has accepted the FCA’s findings it qualified for a 30% discount. Otherwise the fine would have been much higher at around £41.6 million.