16 February 2007
Credit card company and loan provider Capital One was guilty of mis-selling payment protection insurance (PPI) policies with its loans and has consequently been fined £175,000 by the Financial Services Authority.
FSA Director of Enforcement Margaret Cole said: "It is unacceptable for people to be put at risk of buying unsuitable protection insurance through not being given the right information at the right time. And consumers should also remember that PPI on credit cards and loans is almost always optional and consider whether they need it before signing up."
While the punishment will be of some consolation to Capital One's 500,000 policy holders, many have criticised the size of the fine, stating that at just £3.50 per policy, the credit card company has been allowed to get off lightly.
Nick White, Director of Financial Services at the independent price comparison and switching website uSwitch.com commented: "Given the cost of PPI on credit cards, this fine will hardly act as a warning to the industry at large, nor will it make a dent in the fees that Capital One are collecting. This is somewhat alarming given that around a quarter of credit card customers take PPI from their card provider."
Mr White did however stress that it was important for the FSA to continue its work and praised the quick response of Capital One, which has promised an investigation into the matter and is carrying out a full remedial programme.
As with the FSA's previous announcements regarding the punishments of Regency, Loans.co.uk, Redcats and most recently, GE Capital, Mr White stressed that there was a greater need for "transparency" in the sector and called for a summary box-style approach to PPI so that consumers can clearly see the true cost of the cover, as well as being able to fully assess and understand the suitability of the policy to their needs and the level of protection they will receive.
© 2008 Adfero Ltd
Content for the uSwitch.com market news service is provided by a third party, Adfero Ltd. Whilst uSwitch.com makes reasonable efforts to check the reliability of this content, uSwitch.com does not guarantee the accuracy thereof or endorse the views or opinions given by Adfero Ltd, unless expressly stated otherwise.