Hastings Insurance Services Ltd (Hastings) (a subsidiary of Insurance Australia Group) has been fined £735,000 by the FSA for not treating customers fairly. The fine is the largest ever imposed on an insurance broking firm.
Hastings discovered that, due to internal systems errors during two periods between July and September 2007, inaccurate insurance quotations were given to customers, resulting in some people paying lower premiums than they should have. In response to these errors, Hastings cancelled the policies.
The FSA found that in so doing, Hastings failed to give sufficient consideration to other possible solutions, such as paying the premium shortfall to the insurance provider. Further, Hastings cancelled the policies using a cancellation clause that was not intended to be used in the circumstances with which it was faced. Generally, Hastings' conduct showed that the firm was focused on the financial costs to itself and that it did not give proper consideration to the effects of its actions on its customers.
The fine would have been £1,050,000 had Hastings not agreed to settle the case at an early stage, write to its affected customers and review the compensation it had offered them.