FBD hit with €490,000 fine for breaches of legislation
THE Central Bank fined insurer FBD almost €500,000 for breaches of consumer protection legislation.
The farm and motor insurer has been fined €490,000 by the regulator for failing to uphold several rules designed to protect consumers, set out in the Consumer Protection Code 2006, which was replaced by a new, similar but stricter code in 2012. It is the main piece of consumer-focused legislation governing insurance companies and other financial institutions.
The breaches took place between 2006 and 2011, when they were highlighted to the Central Bank by FBD itself. An investigation was carried out both by consultants and the regulator.
They included a failure to alert some customers that they were being recorded during phone conversations and a failure to provide all terms of contracts in writing.
The insurer was also castigated for not putting in place a proper procedure for handling complaints and for failing to show effective staff training in 2007 and 2008.
It also failed to advise some customers that they could be levied with an administration charge for providing incorrect information, and for not ensuring that contractors hired for outsourced work also implemented the code. The regulator highlighted this last breach as particularly unacceptable.
"In circumstances where firms outsource regulated activities to other entities, the Central Bank expects firms to exercise due skill and care when entering into and/or managing those outsourcing arrangements and to ensure that the outsourced activity is conducted in compliance with the Consumer Protection Code and any other relevant regulatory requirements," said director of enforcement Deirdre Rowland.
Responding to the penalties, FBD said the issues were historical in nature and had all been remedied by the time the investigation finished.
"FBD identified the breaches of the 2006 code and reported these to the Central Bank," said the company. "While we are obviously very disappointed that these breaches occurred, we are satisfied that they are legacy issues. We are pleased that the Central Bank has confirmed that the appropriate remedial action was promptly taken by FBD. Most importantly, we are confident that no customer was financially disadvantaged. FBD will continue to work ever harder to maintain our high standards and improve our customer experience."
Though industry sources said the fine was unexpectedly high given that the offences were highlighted by the insurer itself and did not cause any loss to consumers, the Central Bank said the penalties "reflect the seriousness with which it treats the relevant contraventions".
Sources also said the Central Bank recently indicated it would be closely scrutinising regulatory compliance by contractors hired by financial services providers.