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FSA fines Direct Line £2.17 million

The Financial Services Authority (FSA) has imposed a fine of £2.17 million on Direct Line Insurance and Churchill Insurance for failing to prevent files that the FSA had requested from being improperly altered.

During the collation of 50 complaint files requested by the FSA for review, 27 were altered improperly before they were submitted because the insurers failed to act with due skill, care and diligence. The majority of the alterations were minor in nature and none of the changes resulted in any customer detriment.

Direct Line and Churchill are owned by the Royal Bank of Scotland Group.

In April 2010, the FSA received 50 files for review.  At around the same time, the FSA received information that some of those files may have been altered or created and so, in June 2010, it visited the offices at short notice.  Following a detailed internal investigation, it was revealed that 27 of the 50 files had been altered before they were sent to the FSA, and seven internal documents were found to contain staff signatures forged by one member of staff.

Tracey McDermott of the FSA says,” This is a serious breach. The insurers failed to give clear instructions resulting in staff making inappropriate alterations with one individual even forging the signatures of colleagues. The significant penalty is intended to underscore to insurers that it is of critical importance that material provided to the FSA must reflect the picture as it is – not as they might like it to be."

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