If we reported on every discrepancy that was made by an insurer, bank or lender then it would be all we ever wrote about, but a recent fine imposed by the FSA is definitely worth mentioning. The Combined Insurance Company of America (CICA) has been hit with a fine of £2.8m for employing a ‘high-risk’ pay scheme that governed the wages of their sales agents.

The City watchdog slapped CICA with a £2.8m fine

The Financial Services Authority (FSA) said that the way sales staff earned their money led to customers being at risk of being treated unfairly when buying accident and sickness insurance. As a result of the findings, CICA has agreed to look into the way customers are treated and pay compensation to where appropriate.

Most of CICA’s policyholders were self-employed or small business owners with the FSA citing the following business failures that led to the fine:

- Sales staff with less-than-adequate qualifications and missing references

- Failure to ensure that sales staff had the knowledge to provide appropriate advice

- Paying sales agents on a commission-only basis was deemed ‘risky’

- Customer complaints and rule-breaking sales staff where not dealt with adequately

The above issues combined with the £2.8m fine (reduced from £4m after an early settlement) and FSA ruling has resulted in CICA not taking on any new business since October last year.