January 12, 2006
Insurer fined over endowment policies
An insurer has been fined by the Financial Services Authority (FSA) for mishandling endowment complaints.
Guardian Assurance and its associated company Guardian Linked Life Assurance were fined by the FSA £750,000 for serious flaws in their endowment complaints system, which the regulator claims were put in place in the knowledge that they could lead a rise in the number of rejections.
The new procedures, introduced at the beginning of 2003, had wrongly rejected 5,600 customers. After altering the complaints system, successful complaints fell from 71 per cent of those who applied to 22.6 per cent.
"Guardian failed to treat its customers fairly by exposing those with a valid complaint to the risk that their complaint could be rejected inappropriately," said director of enforcement Margaret Cole.
"Consequently, they may not have received the compensation to which they were entitled. The relatively large size of the firm's mortgage endowment customer-base meant that these failings exposed a high number of consumers to potential financial loss.
"Firms must have robust complaints handling procedures in place and must communicate to the FSA any problems or risks to the fair handling of complaints as soon as they arise. If in doubt, firms should approach the FSA and not sit on the problem."
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