The settlement is with the Irish division of international niche insurance company Combined Insurance Company of Europe Ltd and relates to 28 breaches of the 2006 Consumer Protection Code.
The breaches covered a wide range of issues including a failure to follow standard claims procedures, over-insuring customers, not properly handling customer complaints, failure to recommend the most suitable products to customers and the failure, by some of its tied agents, to act fairly, honestly and professionally towards consumers.
It was also found to have wrongly obtained customers’ bank account details in order to use them to set up policies in other peoples’ names. The breaches took place between August 2006 and April of this year.
On top of the €3.35m fine, Combined Insurance is likely to have to refund around €2.16m to holders of a combined 7,917 policies, all of which are held in Ireland.
To date, approximately €564,328 has been refunded, covering nearly 3,240 policies.
“This is the largest fine issued by the Central Bank and reflects the seriousness with which we view fundamental regulatory failures, including inadequate systems and controls, which cause large scale non-compliance with our regulatory requirements.
“This enforcement action relates to consumer protection failures and the penalty imposed demonstrates that we will not tolerate breaches of this nature,” commented Peter Oakes, director of enforcement at the Central Bank.
Reports surfaced last year that Combined’s sales practices were being investigated by the Financial Regulator.
In addition to Ireland, however, the company has also been fined by Britain’s financial watchdog to the tune of £2.8m (€3.28m); over what the British regulator called “widespread failures” reflecting “a culture which didn’t recognise the importance of treating customers fairly”.
For its part, Combined Insurance (Ireland) stated yesterday that it has already taken “decisive action” to correct its problems “by appointing a new board of directors and management team, improving processes and controls and suspending new sales”.
Combined Insurance added that the Central Bank’s actions address “certain historic business practices that did not meet regulatory requirements, or our company’s own standards”.