Ireland's Central Bank handed out a record fine of 3.35 million euros (3.9 million U.S dollars) to the Combined Insurance Company of Europe on Monday after it uncovered 28 breaches of regulatory guidelines.
The fine is the largest the Irish Central Bank has handed out to a financial services firm. The company was also ordered to repay 2 million euro to its customers.
The fine relates to customer protection failures as well as other regulations covering the selling of insurance. The company's policies were sold by a network of tied agents. The Central Bank found that some of these agents acted "dishonestly, unfairly and unprofessionally."
The bank said agents wrongly obtained customers' bank account details and used them to set up policies in other people's names.
In other cases, customers' bank account details were used to set up additional policies for these customers without their permission.
The insurance company is also said to have failed to ensure that staff handling complaints had the necessary qualifications.
The breaches of the rules took place between August 2006 and April 2011. More than 560,000 euro has already been refunded to customers.
The Irish Central Bank said in a statement said the penalty imposed demonstrated that the bank will not tolerate breaches of this nature.
"The types of failures arising in this matter not only cause detriment to a firm's customers but also erode the special trust customers place in regulated firms, leading to significant reputational and regulatory cost, in the form of penalties and the expense of remedial action for firms," it said.
In January 2012, new legislation in Ireland relating to consumer protection will come into action.