The issue of mis-selling has again reared its ugly head after the FSA handed out its heaviest-ever fine for the sale of payment protection insurance (PPI).
The regulator today announced it has fined HFC Bank £1,085,000 for failing to give “suitable” advice on PPI, and for having inadequate systems and controls for the sale of the insurance.
It says that, between January 2005 and May 2007, the advisers at the bank, which has 136 branches countrywide, were recommending PPI to customers regardless of its suitability.
It says the bank did not require advisers to fully explain why they recommended a particular policy or demonstrate to customers what the policy did or did not cover.
It is the fifth PPI-related fine meted out by the FSA, with the previous high at £610,000, and follows thematic work carried out by the FSA in September last year.
The study found improvements in some areas, but also that many firms selling PPI were still failing to treat their customers fairly.
FSA director of enforcement, Margaret Cole, says the fine illustrates how seriously it takes the mis-selling of PPI.
“We are determined to see much better practice in the PPI market,” she says. “We announced in September that we would be imposing higher fines for serious failings in the retail market including against firms who fall short in relation to PPI.
“The fine against HFC is evidence of our determination in this area. HFC's failings put its customers at risk of buying unsuitable protection insurance and the financial impact on them of unsuitable advice was likely to be significant.”
Between January 2005 and May 2007 HFC sold PPI with 75% of the loans it provided, totalling 163,000 policies, of which 124,000 were single premium policies sold with unsecured loans.
HFC has pledged to change its sales processes and initiate a remedial action plan. The firm also received a 30% discount on the fine for agreeing to settle at an early stage.
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