Friends Provident rapped by FSA.
Byline: Nevill Boyd MaunsellFriends Provident has been fined pounds 675,000 for wrongly rejecting complaints from holders of endowment mortgages by using procedures that put them at a disadvantage. The Financial Services Authority said yesterday that Friends sold 216,679 mortgage endowments between April, 1988 and the end of 2001. It still offers a package for home-buyers who want it.
Between March, 2000 and February this year it received 21,788 complaints from policyholders.
The FSA said some 5,500 of these were rejected though they may have been genuine because Friends' procedures were 'inherently not fair and were biased against customers'.
Problems included a readiness to dismiss consumers' evidence when it was not supported by documentary proof.
Friends also assumed that home-buyers who already had an endowment or other investment understood the risk associated with an endowment policy.
It also took it for granted that customers who did not exercise their cancellation rights once they had received all the post-sale disclosure information were satisfied with the advice they had received and the product at the time of sale.
These and other failures required a significant financial penalty because they arose from a systematic weakness in Friends' procedures and exposed a large number of customers to potential loss.
Andrew Procter, director of enforcement at the FSA, said 'We will not tolerate poor systems which expose consumers to the risk that genuine complaints, which may deserve compensation, are rejected. Friends Provident and its senior management failed to respond in an effective and timely manner to FSA guidance and to correct problems found in its systems when it had reasonable opportunity to do so.'
He accepted that the failings had been mitigated by Friends' co-operation and action it had taken, including a new approach to endowment mortgage complaints and setting up a new group to review past complaints to ensure customers had been treated fairly.
A Friends spokesman said 'We do regret what has happened. As soon as we knew about it we started correcting it. We are going back over all the 5,000 cases to see no customers are disadvantaged.'
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| Title Annotation: | Business |
|---|---|
| Publication: | The Birmingham Post (England) |
| Date: | Dec 18, 2003 |
| Words: | 351 |
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