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19/01/2012
Direct Line & Churchill Fined £2M For 'Tampering'
High profile insurers, Direct Line and Churchill, have both been fined a total of £2.17 million after found to have been tampering with their complaints files.
The Financial Services Authority (FSA) said it was imposing the fine for failure by the companies to conduct their businesses with "due skill, care and diligence".
The FSA said that during the collation of 50 complaint files requested by them for review, 27 were "altered improperly" before they were submitted. Most of the alterations were minor in nature, according to the FSA, and none of the changes resulted in any customer detriment.
However, the FSA also revealed that while the fine relates specifically to failings by Direct Line and Churchill, both firms had taken out insurance with UK Insurance Limited, which is owned by the Royal Bank of Scotland Group and now responsible for paying the fine.
In April 2010, the FSA received 50 files for review. At around the same time, the FSA received information that some of those files may have been altered or created and so, in June 2010, it visited the Firms' offices at short notice.
Following a detailed internal investigation conducted by the Firms, it was revealed that 27 of the 50 files had been altered before they were sent to the FSA, and seven internal documents were found to contain staff signatures forged by one member of staff.
Tracey McDermott, the FSA's acting director of enforcement and financial crime, said:
"This is a serious breach. The Firms' attempt to ensure that complete files were provided to the FSA backfired. The Firms failed to give clear instructions resulting in staff making inappropriate alterations with one individual even forging the signatures of colleagues. The Firms' management did not know what changes had been made or when.
"In this case, the alterations did not impact on the FSA's ability to do our job. The significant penalty is however intended to underscore to firms that it is of critical importance that material provided to the FSA must reflect the picture as it is - not as they might like it to be."
The Firms agreed to settle the case at an early stage and therefore qualified for a 30% discount. Without the reduction the FSA would have fined them £3.1 million.
(DW)
The Financial Services Authority (FSA) said it was imposing the fine for failure by the companies to conduct their businesses with "due skill, care and diligence".
The FSA said that during the collation of 50 complaint files requested by them for review, 27 were "altered improperly" before they were submitted. Most of the alterations were minor in nature, according to the FSA, and none of the changes resulted in any customer detriment.
However, the FSA also revealed that while the fine relates specifically to failings by Direct Line and Churchill, both firms had taken out insurance with UK Insurance Limited, which is owned by the Royal Bank of Scotland Group and now responsible for paying the fine.
In April 2010, the FSA received 50 files for review. At around the same time, the FSA received information that some of those files may have been altered or created and so, in June 2010, it visited the Firms' offices at short notice.
Following a detailed internal investigation conducted by the Firms, it was revealed that 27 of the 50 files had been altered before they were sent to the FSA, and seven internal documents were found to contain staff signatures forged by one member of staff.
Tracey McDermott, the FSA's acting director of enforcement and financial crime, said:
"This is a serious breach. The Firms' attempt to ensure that complete files were provided to the FSA backfired. The Firms failed to give clear instructions resulting in staff making inappropriate alterations with one individual even forging the signatures of colleagues. The Firms' management did not know what changes had been made or when.
"In this case, the alterations did not impact on the FSA's ability to do our job. The significant penalty is however intended to underscore to firms that it is of critical importance that material provided to the FSA must reflect the picture as it is - not as they might like it to be."
The Firms agreed to settle the case at an early stage and therefore qualified for a 30% discount. Without the reduction the FSA would have fined them £3.1 million.
(DW)
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