Customers were missold PPI pn loans, FSA said
FSA fines Liverpool Victoria for missold PPI
Wednesday, 30 Jul 2008 12:21
The Financial Services Authority has fined Liverpool Victoria Banking Services (LVBS) £840,000 plus compensation for its sales practices relating to payment protection insurance (PPI).
Customers who phoned LVBS for an unsecured personal loan between January 14th 2005 and August 8th 2007 had the cost of PPI added to their loan without the customer asking for it, said the Financial Services Authority (FSA).
If the customer realised they did not have to buy the cover and objected, LVS pressured them into accepting the product, the FSA said.
In addition, the cost of the premium was added to the loan, so customers had to pay additional interest.
In 97 sales calls reviewed, the FSA found over 60 per cent to be non-compliant.
FSA director of enforcement, Margaret Cole, said: "When customers phone for a quote, it is totally unacceptable for firms to add on the cost of insurance which the customer has not asked for.
"Many customers make their decisions when speaking to sales staff. If those conversations are unclear or misleading it will be no defence for firms to say that full details were included in paperwork which customers received later."
The FSA has previously fined seven firms over poor PPI selling practices and introduced new rules to improve the market in January.
Which? head of campaigns, Louise Hanson, said: "This proves that PPI is still being missold. Even more worryingly, it went on for two and a half years in this case before the FSA stepped in.
"While it's good to see firms being hit in the pocket for misselling, the FSA and industry need to do more to stop it happening in the first place.
"Anyone who has a personal loan or credit card should check whether they have a PPI policy and, if they think it was missold to them, should consider making a complaint."
LVBS said it "apologises to customers for any past shortcomings in the PPI sales process".
The firm added it will be writing to all customers affected and has launched a "customer redress programme" that the FSA has acknowledged is a fine example to other firms.
Customers who were missold the product will receive an automatic refund of the interest they paid and LVBS will be writing to its PPI customers asking them to review the terms of their PPI policy and offering to pay full redress where appropriate.