An FSA investigation found that 85% of the business of
Glasgow-based Capital Mortgage Connections Ltd was generated by
cold calling potential customers.
The fine also includes Capital's failure to treat its customers
fairly by being unable to demonstrate that it gave appropriate
pricing information on the accident, sickness and unemployment
(ASU) insurance polices it sold.
Over 97% of ASU insurance polices sold by the firm were on a
single premium basis. Capital was unable to demonstrate that it
advised its customers of the potentially cheaper monthly option and
gave suitable pricing information to them.
"Cold calling potential customers for mortgage business is
against our rules and firms operating in the industry should be
aware of this," said Jonathan Phelan, head of retail enforcement at
the FSA. "Management is responsible for ensuring that firms comply
with our rules and we will act where we find breaches."
The regulator has instructed CMC to carry out a past business
review to all existing single premium ASU insurance policy
customers to ensure they are fully aware of the benefits, cost
alternatives, terms and conditions of the product they have and the
reasons why they were recommended the single premium plan.
By agreeing to settle at an early stage of the FSA investigation
the firm qualified for a 30% discount under the FSA’s Executive
Settlement Scheme.
