As if some banks and building societies don’t have enough to worry about, now one of them has copped a record fine!
The FSA has fined Alliance & Leicester (A&L) £7 million for serious failings in its telephone sales of payment protection insurance (PPI).
Between January 2005 to December 2007 A&L sold PPI policies to 210,000 of you seeking a personal loan at an average price of £1,265, but there was a general failure by their advisers to provide you with detailed costs of the PPI.
The FSA said A&L did not make it sufficiently clear that PPI was optional and it trained its staff to put pressure on many of you when you queried why PPI was included in your quotation or you challenged advisers’ recommendations.
The insurance, which is sold alongside credit cards and loans, is designed to cover repayments if you lose your job or are unable to work due to sickness or an accident. However, it has been criticised for being expensive and unsuitable for many of you who are sold them.
As well as paying the fine, A&L has agreed to run a comprehensive customer contact programme, overseen by third party accountants.
It will write to all of you who took out policies by telephone in conjunction with an unsecured loan between the dates mentioned above telling you to review your policy against product information sent to you. It will also review any relevant rejected complaints and claims and has committed to pay redress where appropriate.
This remedial action has been taken into account by the FSA and has reduced the level of penalty which would otherwise have been imposed on the firm.
Margaret Cole, director of enforcement at the FSA, said:
“The failings at A&L are the most serious we have found. This is reflected in the record PPI fine. It is very disappointing that after three years of regulation we are still finding serious problems in PPI sales.
“This case shows that we will continue to step up the action we take when firms do not sell PPI properly. Customers should be able to rely on impartial advice based on their individual needs and demands.
It is particularly unacceptable for a firm to train its advisers to put pressure on customers when recommending insurance cover which they have not asked for and may not need. Firms cannot rely on paperwork sent out later as an excuse for unclear or misleading statements given on the telephone.”