YOUR COMPLIANCE MATTERS:                FCA fines LBGI £90M for misleading customer communications

YOUR COMPLIANCE MATTERS:               FCA fines LBGI £90M for misleading customer communications 

Relevance:                 All firms. 

Action required:       Ensure that your documents do not make claims that you cannot substantiate. 

Through our regular audit work, we continue to fail cases where we see claims that premiums are competitive, represent good value or variations on similar themes. 

The FCA has now fined LBGI (Lloyds Banking Group) for stating that customers would receive a “competitive price” for their cover at renewal, although LBGI did not substantiate this language or check that assertions around competitiveness were correct. 

In addition, the FCA revealed that LBGI informed approximately half a million customers that they would receive a discount based on either their ‘loyalty’, the fact they were a ‘valued customer’, or on a promotional or discretionary basis – the regulator found that ‘the described discount was not applied and was never intended to apply’.

 Serious consumer harm

Following its investigation, the FCA declared that LBGI breached Principle 3 and Principle 7 of the FCA’s Principles for Businesses between 1 January 2009 and 19 November 2017, which has led to the fine of just over £90m. 

Mark Steward, executive director of enforcement and market oversight at the FCA said: ‘Firms must ensure their communications with customers are clear, fair and not misleading.LBGI failed to ensure that this was the case. Millions of customers ended up receiving renewal letters that claimed customers were being quoted a competitive price, which was unsubstantiated and risked serious consumer harm.’ 

Action required

You should ensure that none of your client communications make claims that you cannot substantiate.

If you have not obtained alternative quotes, we cannot see how you can claim that terms offered are competitive, good value, or use any other term suggestion anything along these lines.

If you need any specific help on this issue, please get in touch.