A complaint department is only useful to customers if it actually listens to and deals with complaints. When it ignores them or fails to correct an error or redress a genuine grievance it is simply another level of frustration in the way of getting a problem solved. This is what the FCA has determined to the case with Phones 4U and its insurers, Policy Administration Services.
An investigation that began more than a year ago led the Financial Conduct Authority to conclude that PAS, which administered insurance policies on sales of phones sold by Phones 4U staff from almost 700 high street stores, had been rejecting legitimate complaints or ignoring them altogether. Now PAS has been hit with an FCA fine of £2.8m; the Guardian reports that by settling early in the investigation Pas avoided a heftier £4m fine.
According to the FCA, PAS’s dereliction in administrative duties occurred between June of 2009 and September of 2011; since the investigation began PAS had hired an outside agency to review the backlog of complaints. Of the nearly 8,000 complaints reviewed, 1,438 were compensated by the company; customers received differing amounts but Phones 4U says that all legitimate complaints have been satisfied.
The problems, according to FCA’s director of enforcement and financial crime Tracey McDermott, arose because PAS “. . . failed to investigate complaints properly or to keep accurate records.” She said they had not met FCA requirements nor the needs of their customers, and there is often a big discrepancy between what customers expect and what they get.
Many of the complaints concerned mis-selling of policies, where the insured had no recourse because of misleading or unexplained clauses in signed agreements. Phones 4U issued a statement apologizing for failures on the part of PAS and said they were cooperating fully with the FCA to improve customer service standards and correct any deficiencies.