FSA to pay out compensation to insurance customers

The High Court has approved the Financial Services Authority’s application to pay approximately £655,000 to policyholders who bought insurance from CIC Insurance Company SA, an unauthorised insurance provider, through a UK-based intermediary called Insureyourshop.com.

Approximately 1700 policyholders, mainly fish and chip shops and takeaway businesses, based across the UK did not have proper insurance. The FSA’s application was supported by CIC and IYS.

Between January and December 2003, IYS issued insurance on behalf of CIC to policyholders in the UK. Policyholders paid a total of approximately £1,460,000 in premiums for employer’s liability and material damage cover. CIC was never authorised by the FSA and was never fully incorporated in Greece.

Jonathan Phelan, head of retail enforcement at the FSA, says:
“The FSA will, where appropriate, take firm action using its full range of powers against firms operating without authorisation and will secure redress for consumers where possible.

“In this case policyholders were fortunate that the FSA was able to secure sufficient funds to compensate for losses that they may have suffered. But consumers should be aware that if they deal with unauthorised firms they may not see their money again. They should check that the firm they are dealing with is authorised by the FSA before parting with their money.”

In January 2004, the FSA warned CIC policyholders to arrange new insurance cover immediately and in February 2004, the FSA wrote to policyholders warning that CIC was not authorised and encouraged them to obtain alternative cover.

The funds will be distributed by Centennial Policyholders Scheme Limited, a scheme set up for the sole purpose of distributing the funds. Outstanding claims which occurred up to 5 March 2004 will be met first. Policyholders whose policies extended beyond 5 March 2004 will receive a refund of their premium for that period.

The FSA last wrote to policyholders in October 2006 regarding the scheme, but invites any policyholder who did not receive that letter to get in touch with the Consumer Contact Centre at the FSA