PPI: Bank fined over failings
Bank fined record £1m for insurance failings
Wednesday, 16 Jan 2008 14:07
HFC Bank has been fined £1,085,000 by the Financial Services Authority (FSA) for payment protection insurance (PPI) failings.
The Birmingham-based lender – part of the HSBC group – which specialises in secured and unsecured loans under the Beneficial Finance brand was found to be "failing to take reasonable care to ensure that the advice it gave customers to buy PPI was suitable".
It was also found to be failing to have adequate systems and controls for the sale of PPI.
From January 2005 to May 2007, HFC did not require advisers to ask about customers' circumstances, whether PPI was suitable, or to explain fully why a policy was recommended.
The FSA found: "These and other failings meant that HFC put its customers at an unacceptable risk of being sold PPI when it was not suitable for them."
Over the 17-month period 163,000 PPI policies were sold by HFC – on 75 per cent of all loans provided, often to consumers with poor credit records.
FSA director of enforcement Margaret Cole said: "We are determined to see much better practice in the PPI market.
"The fine against HFC – the biggest PPI fine to date – is evidence of our determination in this area."
She added: "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."
The previous highest PPI fine of £610,000 was handed out to GE Capital in January last year over polices sold alongside store cards.