Negligent Insurance Broker
An insurance broker that cancelled thousands of motor insurance policies it sold to customers too cheaply has been fined £735,000, the City watchdog has said.
Between July and September last year, an internal system error at Hastings Insurance Services caused it to give more than 5,700 customers "significantly lower" motor insurance quotations than they should have received.
The Financial Services Authority (FSA) said initially 1,880 policies were sold with premiums under-priced by an average of £222, while in the second incident 3,889 polices were taken out with premiums an average of £539 lower than they should have been.
When the Bexhill-on-Sea-based company, which also has offices in Manchester and Leicester, uncovered the error it cancelled 4,550 of the policies.
The move forced customers to take out new policies at short notice, with many customers unable to earn no claims discounts for the period for which they were insured.
The firm only paid compensation for stress and inconvenience to customers who complained, rather than ensuring all customers were compensated.
The FSA said the way the firm cancelled the policies, and the service it gave to customers following the cancellation, showed that it focused on the financial cost to itself and did not consider the detrimental impact on its customers.
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