The Financial Services Authority has fined Capital Mortgage Connections £17,500 for cold calling potential customers and other rule breaches.
An FSA investigation in November 2005 found 85% of CMC's business was generated by cold calling potential customers, a practice which breaches the regulator’s rules.
In addition, over 97% of accident, sickness and unemployment (ASU) insurance polices sold by the firm were on a single premium basis.
The FSA says CMC failed to treat its customers fairly by being unable to demonstrate it gave appropriate pricing information on the ASU insurance polices it sold or advised customers of the potentially cheaper monthly option.
It has instructed CMC to carry out a past business review of all existing single premium ASU insurance policy customers to ensure they are fully aware of the benefits, cost alternatives, terms and conditions of the product they have and the reasons why they were recommended the single premium plan.
Jonathan Phelan, head of retail enforcement at the FSA, says: "Cold calling potential customers for mortgage business is against our rules and firms operating in the industry should be aware of this. This is the first time we have taken steps against a firm for undertaking this activity and we will continue to monitor the market for instances of cold calling.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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