FSA Fines Hastings Direct For Error

Posted by admin

September 24, 2008

Hastings Direct, one of the UK’s largest car insurance companies, was fined a massive £735,000 after cancelling 4,550 policies when the insurer discovered the customers had been under-priced, according to the Telegraph.co.uk.

Last summer, between July and September, several customers were inadvertently offered lower premiums due to a software error. In some cases, customers saved as much as £539. The financial watchdog’s main concern with the insurer was they left many people uninsured while they were forced to find new car insurance cover at short notice.

The FSA said the company’s actions were based more on its own financial loss than the possible ‘detrimental effect on customers’. Some customers may have had to pay higher than usual premiums since they were obliged to declare their last insurer, in this case Hastings Direct, cancelled their policy.

Hastings could have been faced with an even larger bill of over £1 million, had they not agreed to settle the case early on in the investigation. The motor insurance company didn’t feel their cancellation clause to be unfair in itself but did concede to the FSA’s argument that their handling of customers could have been dealt in a more favourable way.

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