The company which administers mobile phone insurance for Phones 4u has been fined £2.8m by the financial regulator for failing to deal with customer complaints properly.
Insurance broker Policy Administration Services (PAS) was responsible for dealing with customer relations, claims and complaints linked to sales of the policies.
The Financial Conduct Authority (FCA) found that PAS had rejected thousands of allegations of mis-sold insurance without proper investigation between June 2009 and September 2011.
Some were simply rejected as the customer had signed a direct debit form. The company then neglected to record the complaints properly meaning that regulatory reporting was wrong.
The FCA said PAS had also failed to investigate and address the root cause of the numerous grievances about the mobile insurance policies sold by Phones 4u.
Taken together, the regulator found that these problems meant PAS was unable to treat customers fairly or improve its customers' experiences.
The company has since employed a third party to review its complaints process. Following a review of 7,099 complaints, compensation has been paid to 1,438 customers.
Tracey McDermott, the FCA's director of enforcement and financial crime, commented: "Proper complaints handling is essential to ensure customers are treated fairly.
"It is also a key tool to help firms identify where things are not working as they should and allow them to take steps to put problems right themselves.
"PAS had wide ranging failures across its complaints handling processes - it failed to investigate complaints properly or to keep accurate records. This is simply not good enough - it does not meet our requirements and does not meet the needs of customers."
In a statement, PAS said: "We apologise for those failings and have compensated the 1,438 affected customers. We engaged an independent third party to undertake a comprehensive review, and our processes were considerably improved in 2011 to ensure such failings do not occur again.
"We have been open and co-operative with the FCA to fully address the issues raised by its investigation, and we continue to work with the FCA to promote high standards of regulatory conduct within the industry."