Insurance giant Swinton was fined £7.4 million by the City watchdog for mis-selling "add-on" policies to as many as 650,000 customers.
The Financial Conduct Authority (FCA), which issued the fine, said Swinton has set aside £11.2 million to repay customers, due to an "aggre6ssive" sales strategy which prioritised profit over consumers' interests.
It found that Swinton failed to provide enough information for customers and properly monitor phone calls when selling personal accident, home emergency and motor breakdown policies between April 2010 and April 2012. These policies generated an income of £92.9 million.
Swinton did not explain the cover clearly enough or tell customers the monthly policies were optional, the FCA found.
It did not give enough information about the terms of the policy, including the conditions and limitations, and cancellation process. The nature of the failings and poor sales scripts meant that "every sale could have been a mis-sale".
Swinton said it "unreservedly apologises to customers" and has changed its sales script and improved its monitoring process. It has contacted more than 650,000 customers it believes may have been affected and has already repaid £1.9 million to customers. Any policy holder who believes they bought monthly cover as a result of mis-selling should contact Swinton directly.
Tracey McDermott, the FCA's director of enforcement and financial crime, said: “Swinton failed its customers. When selling monthly add-on policies, Swinton did not place the consumer at the heart of its business. Instead it prioritised profit.
“At the FCA we have been clear in our expectation that firms must behave in the interests of consumers. Today’s outcome shows our approach in action and will act as a deterrent for other firms tempted to put profit figures above the fair treatment of customers."
The total fine of £7,380,400 includes a 30% discount as Swinton settled at an early stage of the investigation.
Swinton’s chief executive Christophe Bardet said: “We apologise for these shortcomings. They were not compatible with the proud history of Swinton, which since 1957 has been providing peace of mind to people through insurance cover.
“As the biggest high-street insurance retailer in the UK, with 500 branches, we are part of the community for more than two million customers.
"Our focus is now to deliver on our promise of insurance with a personal touch. Swinton is embarking on a £60 million investment in growth which puts the customer at the heart of everything we do."
The FCA recently announced a review into add-on insurance products and FCA chief executive Martin Wheatley said the market study will look at "whether these products represent good value for money ".