UNAT DIRECT Insurance Management Limited, a wholly-owned subsidiary of American International Group Inc (AIG), has been fined £640,000 by the FSA for failures in due dilligence regarding the appointment and operation of nine of its call centres.

While UNAT did implement procedures to check their call centres’ compliance with the FSA, the firm failed to prevent them from selling to consumers before the full due diligence process had been completed. The FSA also stated that senior management were not fully appraised of the call centres’ ability to properly sell insurance projects.

In one case mentioned by the FSA, UNAT had not completed its due diligence over 250 days after the call centre had begun selling whereas another call centre sold 4,000 insurance policies when it was not authorised by the FSA to do so.

Margaret Cole, Director of Enforcement at the FSA, said: "Selling general insurance products to consumers through call centres involves greater risk. UNAT was aware of the higher risk but failed to carry out proper checks on the call centres it used. UNAT's failure to have effective control over its due diligence process exposed customers who bought policies from the call centres to an unacceptable level of risk that they would not be treated fairly. The FSA will impose significant fines on general insurance firms whose management of call centre risks falls below acceptable standards."

UNAT ceased all sales of general insurance through call centres on 22 March 2007 pending the outcome of the FSA review. According to the FSA UNAT has now improved its systems and controls following the recommendations in the review and is working with the FSA to ensure that no customer has suffered loss by putting in place a comprehensive restitution package.