The regulator found Policy Administration Services, which administers mobile phone insurance policies sold by Phones4u, had failed to record complaints about mobile phone insurance or take accusations of mis-selling seriously.
It also criticised the firm’s practice of rejecting mis-selling complaints just because the customer had signed a direct debit form.
FCA enforcement and financial crime director Tracey McDermott said: “Proper complaints handling is essential to ensure customers are treated fairly. It is also a key tool to help firms identify where things are not working as they should and allow them to take steps to put problems right themselves.
“Where this is done effectively it not only means a better relationship between firms and their customers but also avoids the cost and reputational damage of regulatory action.”
PAS settled at an early stage of the investigation and therefore qualified for a 30% discount. Without the discount the fine would have been £4,049,637.
Since the investigation, the intermediary has reviewed over 7,000 complaints and paid compensation to 1,438 customers.
