Barbon staff suspended as FSA probes ‘unfair’ selling

The FSA continued its crackdown on the sale of insurance products as Barbon became the latest firm to fall foul of its guidelines.

Two Barbon executives have been suspended after the FSA scrutinised how contents insurance was sold through one of its brands, HomeLet.
Insurance Times understands that action against other property brokers could follow, as the FSA, scared by the payment protection insurance debacle, works around the clock on ensuring a fair sale of insurance products.

Click here to read our Talking points.

Click here to read our Pass notes.

The regulator is talking to HomeLet about a clause in some letting agents’ tenancy contracts requiring tenants to buy contents insurance.

The clause breaches FSA and Office of Fair Trading (OFT) guidelines, which state that a tenant cannot be asked to buy their own contents insurance but can be asked to buy insurance that covers their landlord’s possessions.

The issue was first raised by the OFT in 2005, but the FSA only sprang into action after an unnamed insurance broker blew the whistle by informing the FSA that it had been involved in the practice.

HomeLet managing director John Boyle’s directorship has been terminated, according to Companies House filings. No explanation has yet been given for this development.

A HomeLet spokesman declined to reveal which executives were suspended but said: “HomeLet is involved in a review process that may lead to policyholders with tenants’ contents policies being contacted about how such contracts were purchased.

“This is a thorough process to ensure it meets the company’s required standards. HomeLet continues to provide insurance products and services to existing and new customers.”

The FSA and OFT are working closely together across the industry in a determined effort to ensure that customers know exactly what they are buying and, in particular, that they clearly understand whether the purchase is voluntary or mandatory.

The regulators also want customers to have reasonable chance of succeeding in a claim.

Products and services under the microscope include legal expenses, warranty cover and ID theft, third-party vehicle repairs and credit hire replacement vehicles to motor accident claimants.

A number of companies have been affected by the FSA’s clampdown, or even the threat of action.

HomeServe was forced to suspend mail marketing and taking new customer calls in October after an internal review found it had been mis-selling policies. The FSA is in close contact with HomeServe.

Credit card insurer CPP has been under FSA investigation since March last year for what it has described as “failings in sales calls with customers”.