The UK Financial Conduct Authority (FCA) has imposed a monetary penalty of £8,373,600 against Stonebridge International Insurance (Stonebridge) for mis-selling accident insurance products to customers from April 2011 and December 2012.
The British financial watchdog found that Stonebridge targeted low and middle income customers without college degrees or professional qualifications, with its personal accident, accidental death and accidental cash plan insurance products.
In order to ensure that the customers didn’t terminate their expensive policies, the company would then use separate employees to contact the customers and actively discouraged them not to cancel the plans.
The UK Financial Conduct Authority enforcement and financial crime director Tracey McDermott said: "Customers are entitled to expect firms to provide them with fair and balanced information to enable them to make the right choices about the product that is right for them.
"Stonebridge failed to do this and, when customers tried to cancel, put up barriers to prevent them from doing so.
"Firms must take responsibility for their outsourcing arrangements and ensure that they treat customers fairly."
During the probe, the FCA found that the products were sold over the phone to retail customers in the UK, Germany, France, Italy and Spain, with lists of potential customers provided by Stonebridge’s business partners, including catalogue sales firms, online retailers, banks and credit card companies.
In return, Stonebridge paid the firms a percentage of the premiums.
The FCA has fined Stonebridge £8.4m and estimates that up to 486,444 customers across the UK and EU could be affected.
Stonebridge is now contacting all of its affected customers across the UK and Europe and will pay some or all of the premiums back to those customers with interest.
Stonebridge has already paid redress worth a total of £400,000 to affected customers in the UK.
Image: FCA fines Stonebridge £8.4m for mis-selling accident insurance policies. Photo: courtesy of James Barker/ FreeDigital Photos.net.