Hastings Insurance Services is fined £735,000 by Financial Services Authority for unfairly treating customers and cancelling their car policies. Hastings Insurance Services cancelled about 4,550 car policies which were not priced correctly. But the amazing fact is that the incorrect polices have been a result of an internal system error and not due to any miscalculation on the part of the customers.

Some of the customers paid lower premiums than what was expected because of inappropriate quotes being given by the broker. However, with the discovery of this mistake, Hastings promptly cancelled the policies of those customers.

According to FSA, Hastings was too prompt in canceling the policies and should have investigated the matter in depth before taking such drastic action. They should have thought of some other remedial measures. The City regulator was also harsh in his statement. He accused that Hastings was only considering its financial loss and was not bothered about the effect it could have on the customers. Hastings has now decided to write to all the affected customers and offer them compensation.

The broker agreed to settle the case early to spare himself of a fine of £1m. He was quick in analysing the damage he has caused and was lucky to receive a 30 per cent rebate on the fine.

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