Direct Line fined over forged files
Insurance firms Direct Line and Churchill have been fined £2.17 million for fudging complaint files, including signature forgery, the City watchdog has said.
Some 27 out of 50 complaint files requested by the Financial Services Authority (FSA) for review were "altered improperly" before they were submitted by the firms, which are owned by Royal Bank of Scotland.
The FSA received the files in April 2010 and at the same time was tipped off that some of the paperwork was changed before they were sent, while it also discovered seven internal documents contained staff signatures forged by one member of staff.
Tracey McDermott, the FSA's acting director of enforcement and financial crime, said: "This is a serious breach. The firms failed to give clear instructions resulting in staff making inappropriate alterations with one individual even forging the signatures of colleagues."
In February 2010, the FSA informed Direct Line and Churchill that it would undertake a review of files to assess the effectiveness of the companies' complaint-handling process.
In preparation for this review, the firms asked a major accountancy firm to do a sample or practice review and discovered that 28% of the 110 files submitted failed to meet complaint-handling requirements.
Before the two companies sent the 50 files off for the official review with the FSA, they conducted a conference call with staff, in which they warned that any similar failure could lead to enforcement action for the firm.
Staff were also told that, if they were found not to be operating to the required standard, they could face disciplinary investigation. Following the warnings to staff, the firms sent off the files, which were later discovered to contain the altered paperwork.
Paul Geddes, chief executive of RBS Insurance, said: "We very much regret the findings of the FSA investigation. Although no customers were disadvantaged, we are very disappointed that we did not meet the standards we expect of ourselves and which the FSA expects of us."
The two firms agreed to settle the case at an early stage and qualified for a 30% discount - without the reduction the FSA would have fined them £3.1 million.