FCA slaps Liberty with £5.2 million fine

The Financial Conduct Authority (FCA) has levied a £5.2 million on Liberty Mutual Insurance Europe for failures in its oversight of mobile phone insurance claims and complaints handling.

Liberty’s customers were exposed to the possibility that their claims and complaints would not be handled fairly, after the UK insurer entered into a relationship with a third party to provide mobile phone insurance.

The third party carried out all of the administrative functions associated with the mobile phone insurance on Liberty’s behalf, including all claims and complaints handling, but the insurer retained all regulatory responsibility for ensuring fairness and oversight.

Over the course of a five-year period starting in 2010, Liberty’s customers were exposed to the possibility that their claims and complaints would not be handled fairly.

Some claims were unfairly declined or not investigated adequately, while customers who complained had the original decision overturned, which created a de facto two-stage claims process, and others had complaints dismissed without a proper investigation having been undertaken.

In coming to the decision to issue a £5.2 million fine, the FCA took under consideration the £4 million in redress that Liberty and the third party offered to customers who may have suffered detriment

The insurer’s decision to settle with the FCA at an early stage also secured it a 30% discount, reducing the potential fine from £7.5 million.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Fair, effective, and prompt settlement of claims is a fundamental requirement of mobile phone insurance, and customers should expect that any claim they make, or any subsequent complaint they lodge, will be dealt with fairly.”

“Insurers must put in place adequate measures to make sure that claims and complaints and handled fairly, especially where those functions are outsourced.”

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Mark Dugdale