In August 2014, financial regulator the Financial Conduct Authority (FCA) fined Stonebridge International Insurance Limited, a subsidiary of Aegon, £8,373,600 over its failings when selling personal accident, accidental death and accidental cash plan insurance.
The fine concerns telephone sales made to customers in Germany, France, Italy and Spain, as well as in the UK.

In addition to the fine, Stonebridge faces the prospect of paying significant sums in compensation to affected customers. £400,000 in redress has already been paid, and it is estimated that almost 500,000 customers could be due a redress payment.

When selling the policies, outsourcing companies used by Stonebridge encouraged customers who were wavering over whether to purchase to buy the plan anyway and make use of the cancellation period if desired. However, when customers tried to cancel, they were then actively discouraged from doing so, and staff were financially rewarded for preventing cancellations. Some customers who wished to cancel were persuaded to take reduced cover instead, but here they were not given sufficient information about the revised policy terms.

Although the policies were being sold by outsourcing companies, they did so using a sales script designed by Stonebridge. These scripts were designed to direct customers towards costlier and more comprehensive forms of insurance, whether the customers needed this or not.

When selling the cover, the outsourcing companies failed to state that they were acting on behalf of Stonebridge at the start of the call, did not properly explain the extent of the limitations and exclusions on the plan (or on occasions gave incorrect or misleading information about exclusions) and conducted the calls too quickly to allow customers to digest information. Many customers were not informed of extra charges they would incur as a result of their chosen payment method.

Reviews by Stonebridge of sales made by the outsourcing companies were limited, and reference is made in the FCA’s Final Notice to the compliance department being ‘under-resourced’. All Stonebridge’s compliance monitoring activity took place remotely in the UK, with no visits being made to the European offices, and there was no monitoring of any kind of the German and Italian activities between April 2011 and December 2012.

Although each European outsourcing operation did carry out their own internal monitoring, this was often of poor quality. One example is that quality assurance of sales calls in France consisted simply of listening to the first five minutes of each call, rather than the entire conversation.

No management information regarding the sales was reviewed by Stonebridge, and on one occasion Stonebridge failed to identify that an outsourcing company had amended a previously approved script.

The FCA noted that Stonebridge purposely targeted lower income customers and those without degrees and professional qualifications, meaning that their financial knowledge may have been lower than that of the average customer.

Tracey McDermott, FCA director of enforcement and financial crime said of the firm’s actions:

“Customers are entitled to expect firms to provide them with fair and balanced information to enable them to make the right choices about the product that is right for them. Stonebridge failed to do this.”

Stonebridge has now ceased selling the products covered by this action. The firm is also said to have put in place new arrangements for monitoring its outsourcing companies, and according to the Final Notice, has “comprehensively revised its governance structure.”