Wholesale and reinsurance broker Alsford Page & Gems Limited (APG), after being publicly censured by the Financial Conduct Authority (FCA), will be paying £399,902 in compensation to customers who purchased extended warranty insurance policies from February 01, 2013 to March 21, 2016.
According to the FCA, it found that APG had failed to sufficiently consider or address the risks associated with selling products to retail customers and that its systems and controls in place were wholly inadequate. This meant that APG had no assurance that its customers were being treated fairly or being sold products they understood or which met their needs.
The policies, which were for goods such as satellite equipment or household appliances, were sold on behalf of APG by six appointed representatives (ARs). The regulator found that the company’s oversight of the ARs was limited and ineffective.
“Principal firms have a responsibility to oversee their appointed representatives and ensure they are carrying out regulated activities properly,” asserted Mark Steward, executive director of enforcement and market oversight at the FCA. “Without adequate oversight, customers are at risk and, as this case shows, where that is the case, the FCA will take action against the principal.”
Aside from the compensation, which is the amount equivalent to the brokerage fees that APG made from selling the extended warranty insurance policies, the regulator would have also imposed a £958,100 (£670,600 when discounted for resolving matters) financial penalty if APG had not established that it was in serious financial hardship.
Meanwhile, given that APG has insufficient funds, the compensation will be funded voluntarily by its current parent PSC Insurance Group Limited. It was also highlighted that APG’s current senior management had no involvement in the matters investigated by the FCA.
APG, which will be contacting the affected customers in due course, was censured for its breaches of Principles 3 and 6 of the Principles for Businesses.