Dixons Carphone slugged with £29m fine for mis-selling mobile insurance

Dixons Carphone fine
// Dixons Carphone given £29.1m fine for mis-selling Geek Squad service
// FCA found Carphone Warehouse staff were trained to sell it to customers who already had insurance cover
// Dixons Carphone accepted the FCA’s findings and have made customer service improvements

Dixons Carphone has been handed a £29.1 million fine from the Financial Conduct Authority for mis-selling its Geek Squad service.

The City watchdog said the retail company trained staff at its Carphone Warehouse business in “spin selling” Geek Squad to customers who already had insurance cover.

Geek Squad is a mobile phone insurance and technical support service.

The FCA also said staff were also trained in “objection handling” of focusing on customer protests rather than assessing whether the product was suitable for them.

It added that the retailer failed to properly investigate and fairly consider customer complaints.

The investigation, which was triggered by a whistleblower, found that Carphone Warehouse made sales of more than £444.7 million from Geek Squad between 2008 and 2015.

The FCA said 35 per cent of the insurance policies were cancelled within the first three months of buying them, which was a key indicator of mis-selling.

“The Carphone Warehouse and its staff persuaded customers to purchase the Geek Squad product which in some cases had little to no value because the customer already had insurance cover,” FCA executive director of enforcement and market oversight Mark Steward said.

“The high level of cancellations should have been a clear indicator to the management of mis-selling.

“Without whistleblowers coming forward, these practices may never have come to light.”

Dixons Carphone said it has made improvements in response to the probe, such as enhancing staff training and compliance monitoring, investing in customer service and increasing the number of independent financial services staff in Carphone Warehouse stores.

The firm has also carried out two customer redress programmes to sort out complaints and cancellations.

“We’re obviously disappointed that Carphone Warehouse fell short in the past,” Dixons Carphone chief executive Alex Baldock said.

“But we’re a very different business today; as the FCA acknowledges, we’ve made significant improvements since 2015.

“We’re committed to stay on that trajectory, and to make sure all customers enjoy the right technology products and services for them.”

As Dixons Carphone has accepted the FCA’s findings, it qualified for a 30 per cent discount.

If they hadn’t, the fine would have been higher at around £41.6 million.

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