17 January 2008
HSBC has been fined £1 million for the way it sold Payment Protection Insurance (PPI), the controversial cover which can be taken out with most forms of borrowing.
The seven-figure fine, affecting HFC Bank, HSBC's consumer lending division, comes as part of regulator the ongoing investigation by the Financial Services Authority (FSA) into the insurance.
PPI is often sold upon purchase of personal loans, credit cards and mortgages - and serves to cover repayments should the customer's financial circumstances change suddenly.
However, firms have been accused by consumer groups of breaking the rules by selling the cover as a 'default' option, with customers having to specifically opt out of the service.
In its ruling, the FSA stated that customers were put at an "unacceptable risk" by HFC of being sold the insurance when it was not needed.
Director of Enforcement at the FSA, Margaret Cole, also signalled that other firms would be fined due to their PPI mis-selling.
"We are determined to see much better practice in the PPI market," she said.
"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."
HFC Bank specialises in selling personal loans and mortgages.
© 2008 Adfero Ltd
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