The Financial Services Authority has fined Loans.co.uk Limited £455,000 for failing to treat its customers fairly when selling payment protection insurance.
The firm sells PPI on an advised basis over the telephone, but the FSA says it failed to gather and record information to show the policy recommendations it made were suitable.
Customers did not receive enough information at the point of recommendation to make an informed decision about the PPI policy being offered and therefore they could not be sure if the recommendation was the right option for them.
The FSA says the breaches were particularly serious because they exposed approximately 14,400 customers to the risk of unsuitable PPI.
In addition, the firm failed to have appropriate compliance monitoring procedures in place to identify failings in the sales process and it did not provide guidance to staff on how to identify a complaint or adequately communicate its complaints handling procedure to them.
Margaret Cole, director of enforcement at the FSA, says: "The principle of treating customers fairly (Tcf) should be embedded in firms' business models to help prevent such failings and it is important that all firms review their systems and controls to reach this standard.
"PPI can provide valuable protection against changes in personal circumstances but customers should come away from the sale having been given the best possible information to understand that the PPI is optional, what the policy will and will not cover and how much it costs.”
By agreeing to settle at an early stage of the FSA investigation the firm qualified for a 30% discount under the FSA’s executive settlement scheme – without the discount the financial penalty imposed would have been £650,000.
Stephen Hayes, chief executive of Loans.co.uk says: "Loans.co.uk is committed to providing its customers with a high level of service. We co-operated fully with the FSA and undertook an internal audit review to ensure effective and timely resolution of the issues identified. New practices have been in place for the past six months."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
Senior Managers Regime
Interest rate outlook unchaged
FCA made demands last week
'Unsung' part of FSCS work