Carphone warehouse will also have to pay an additional £2.3m in compensation and damages to customers, the UK watchdog said in a Wednesday press release. The scandal was revealed after whistleblowers exposed the misconduct, prompting an investigation from the FCA.
— FCA (@TheFCA) March 13, 2019
Evidence revealed that Carphone Warehouse had sold Geek Squad policies totalling over £444.7m between 1 December 2008 and 30 June 2015, with a high proportion of cancellations following.
Mark Steward, executive director of Enforcement and Market Oversight at the FCA, said that the retailer and its staff "persuaded customers to purchase the Geek Squad product which in some cases had little to no value because the customer already had insurance cover," adding that the company's "high-level of cancellations should have been a clear indicator to the management of mis-selling".
'Without whistleblowers coming forward these practices may never have come to light," Mr. Steward said. "In the past few years, whistleblowers have contributed critical intelligence to the enforcement actions we have taken against firms and individuals."
— Alex Roddie (@alex_roddie) March 13, 2019
Carphone Warehouse agreed to the findings and did not appeal the case, as well as setting aside £2.3m in compensation to roughly 28,000 customers who had been sold the Geek Squad policies, leading to £948,777 in refunds in 2016. Had the company not cooperated with the FCA, it would have been find around £41.6m.
Alex Baldock, the Dixons Carphone chief executive, said: "We're obviously disappointed that Carphone Warehouse fell short in the past. But we're a very different business today; as the FCA acknowledges, we've made significant improvements since 2015. We're committed to stay on that trajectory and to make sure all customers enjoy the right technology products and services for them."
When customers complained about the Geek Squad sales, Carphone Warehouse failed to investigate their complains, resulting in not upholding valid complaints where the product had been mis-sold and management not having "an accurate impression of indicators of mis-selling", the FCA said.
Carphone Warehouse had been fined £245,000 in 2006 for failing to provide key information to customers who had been sold mobile phone insurance.