Insurance company fined £735,000

An insurance broker has been fined £735,000 for treating customers unfairly by cancelling motor insurance policies it had sold too cheaply.

The broker, Hastings Insurance Services Ltd, cancelled around 4,550 deals after it found internal errors gave customers inaccurate quotes.

The problem, which occurred in June and July 2007, meant customers were paying too little.

The broker failed to consider other remedies, the industry watchdog found.

"It is clear from our investigation that Hastings put its own interests ahead of those of its customers," said Margaret Cole, director of enforcement at the Financial Services Authority (FSA).

She added that Hastings failed to properly consider what effect cancelling policies would have had on customers.

'Short notice'

The broker traded as Hastings Direct and was based at Bexhill-on-Sea in East Sussex.

The errors meant that some of the policies were on average £539 cheaper than they should have been.

The FSA said that some of the customers were forced to take out new insurance policies at short notice.

In some cases they were unable to earn a no claims discount during the period they were insured.

It added that customers could face difficulties getting insurance in the future as they would have to declare they had previously had a policy cancelled.

The fine levied by the FSA would have been higher than £1m, but was reduced as Hastings agreed to settle at an early stage in the inquiry.

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