The Financial Conduct Authority (FCA) has fined Moorhouse Group £159,300 for failures in relation to the oversight and control of its telephone sales and in particular the sale of commercial vehicle add-on insurance products during 2012.
Moorhouse is a general insurance broker whose business is focused on selling motor and liability related insurance products to small and medium enterprises (SMEs) including very small businesses known as micro-SMEs.
Georgina Philippou, acting director of enforcement and market oversight at the FCA said: “Moorhouse had a responsibility to treat its customers fairly and this is true whether they are individuals or small businesses.
“Moorhouse failed to put in place systems and controls to ensure customers were given the right information. This put customers at risk of buying the wrong products and not having the right insurance cover.”
Moorhouse failed to disclose appropriate information about the limitations and exclusions of commercial vehicle add-on products to consumers before they were sold. Without balanced information there was a risk that consumers were not able to make an informed decision as to whether the product was suitable for them.
For example, under the excess waiver add-on policy, cover was provided only when the damage exceeded the excess agreed under the core policy. The breakdown add-on policy did not cover breakdowns which would be prevented by routine servicing of the vehicle, or replacing its tyres or windows. These limitations were not disclosed.
During 2012, Moorhouse failed to ensure that a consistent and effective quality assurance process was in place to monitor the telephone sales process and failed to identify that customer data was being recorded inaccurately by sales agents, potentially affecting whether any claims later made by those customers were accepted. The FCA found that the Board and senior management failed to give sufficient attention to compliance issues and did not take adequate steps to address them.
In April 2013, the FCA conducted a review of telephone sales of commercial vehicle core insurance products and related insurance add-on products by Moorhouse. The FCA found that Moorhouse appeared to provide customers with inadequate information in relation to the sale of add-on products before completion of sale.
A subsequent review by a skilled person, an independent third party appointed at the direction of the FCA, found that insufficient details about each product were being provided to customers in good time.
Moorhouse will be required to communicate the outcome of the FCA’s investigation to customers who purchased commercial vehicle add-on products during 2012. Customers will be encouraged to contact Moorhouse if they have any concerns about the way in which they were sold this product.
Moorhouse agreed to settle at an early stage of the FCA’s investigation and therefore qualified for a 30% (stage 1) discount. Were it not for this discount the FCA would have imposed a penalty of £227,670.
