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Dixons Carphone PLC

Dixons Carphone PLC FCA Investigation says company did not meet expected standards

Dixons Carphone PLC (LON: DC.) has today announced that the FCA has concluded an investigation into Geek Squad mobile phone insurance selling processes at The Carphone Warehouse Ltd that took place between December 2008 and June 2015 and has identified key areas where, in that period, the FCA has determined that the company did not meet expected standards. In concluding the investigation, the FCA has imposed a fine of £29.1m on the company, inclusive of the discount applied on early settlement.

Dixons Carphone has worked closely with the FCA throughout the investigation and accepts that in the past the company’s practices fell short. As the FCA acknowledges in its decision, “Carphone Warehouse has made significant improvements to its approach to regulatory matters” since 2015.

The company has introduced more comprehensive customer-needs assessments, enhanced colleague training and compliance monitoring, invested in customer service and post-sale customer satisfaction, and substantially increased the number of independent financial services coaches across the Carphone Warehouse store estate.

The company has also voluntarily carried out two customer redress programmes, covering complaints and cancellations.

As previously disclosed, the Group took certain provisions as a charge to non-headline profits at its interims on 12 December 2018 and these were also included within the exceptional cashflow guidance given for FY19/20 at the time. As a consequence, there is no impact from today’s announcement to the Group’s guidance given at its trading update on 22 January.

Alex Baldock, Group Chief Executive, said:

“We’re obviously disappointed that Carphone Warehouse fell short in the past. But we’re a very different business today; as the FCA acknowledges, we’ve made significant improvements since 2015. We’re committed to stay on that trajectory, and to make sure all customers enjoy the right technology products and services for them.”