UNAT used nine call centres to sell general insurance products underwritten by another AIG group company, but failed to complete due diligence up to 250 days after the call centres began selling.
The regulator says UNAT failed to prevent its staff from instructing the call centres to start selling to consumers before the due diligence process had been completed.
The FSA also says senior management did not receive adequate management information that the call centres were suitable to carry out insurance sales.
In one case a call centre sold insurance when it was not authorised to do so by the FSA, selling around 4,000 policies to consumers over a six-month period.
FSA director of enforcement Margaret Cole says: “Selling general insurance products to consumers through call centres involves greater risk. UNAT was aware of the higher risk but failed to carry out proper checks on the call centres it used.
“UNAT’s failure to have effective control over its due diligence process exposed customers who bought policies from the call centres to an unacceptable level of risk that they would not be treated fairly. The FSA will impose significant fines on general insurance firms whose management of call centre risks falls below acceptable standards.”