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By a Final Notice of 13 March 2019, the FCA has imposed a fine of £29,107,600 on The Carphone Warehouse Limited (“CPW”) for breaches of FCA principles in relation to the sale of over £400m worth of mobile phone insurance policies.

This matter was one of the first to involve a Focused Resolution Agreement whereby CPW agreed the facts as found by the FCA and that it had breached various legal requirements, whilst reserving its right to argue that the proposed penalty was too high. As a result of entering into the Focused Resolution Agreement, CPW secured a 30% settlement discount on whatever was determined to be the appropriate penalty.

Following a contested hearing, the FCA’s Regulatory Decisions Committee determined issues concerning the correct measure of “revenue” for the purposes of the FCA’s penalty policy in the context of insurance policy sales, the relative significance of redress schemes and prior disciplinary action as aggravating and mitigating factors, and the relationship between the FCA’s previous and current penalty policies where the admitted misconduct straddled both periods.

The ultimate fine of £29,107,600 incorporated both a 5% uplift to reflect the overall balance of aggravating and mitigating factors and the 30% discount secured as a result of CPW having entered into a Focused Resolution Agreement.

Javan Herberg QC acted for CPW, Andrew George QC acted for the Authority