The regulator has slapped a 750,000 fine on Guardian Assurance and Guardian Linked Life Assurance for serious systemic flaws in its mortgage endowment complaints handling procedures.
The company was also slammed for not drawing the problems to the attention of the FSA.
The FSA claims Guardians procedures were not effective to ensure complaints were fairly and adequately investigated. It says these failings exposed the 5,600 customers whose complaints were rejected between January 2003 and December 2004 to the risk of financial loss.
There was also a significant increase from April 2003 onwards in the proportion of complaints the firm rejected which were subsequently upheld by the Financial Ombudsman Service.
FSA director of enforcement Margaret Cole says: “Guardian failed to treat its customers fairly by exposing those with a valid complaint to the risk that their complaint could be rejected inappropriately.
Consequently, customers may not have received the compensation to which they were entitled. The relatively large size of the firm’s mortgage endowment customer-base meant that these failings exposed a high number of consumers to potential financial loss.