27 October 2006
The Financial Services Authority (FSA) has fined credit company Loans.co.uk £455,000 for treating its customers unfairly when selling them payment protection insurance (PPI) policies.
The penalty is the first to have been issued following the financial storm over the Office of Fair Trading's (OFT's) findings that customers were ill informed, misled and treated unfairly by many credit companies offering PPI polices.
Margaret Cole, FSA director of enforcement, explained why Loans.co.uk, who the FSA hasregulated since January 2005, was issued with the fine.
"Loans.co.uk failed to make sure adequate processes were in place to ensure the suitability of its PPI recommendations and treat its customers fairly," she said, before highlighting that "PPI can provide valuable protection against changes in personal circumstances", providing the consumer was given the "best possible information to understand that the PPI is optional, what the policy will and will not cover and how much it costs".
Stephen Hayes, chief executive officer of Loans.co.uk, commented: "Loans.co.uk is committed to providing its customers with a high level of service. We cooperated fully with the FSA and undertook an internal audit review to ensure effective and timely resolution of the issues identified. New practices have been in place for the past six months."
Consumers are being advised to make sure they are not being sold an inappropriate policy by asking the right questions. Ms Cole advised that the public should "ask straightforward questions of sales staff when PPI is mentioned to help them to identify whether the product is right".
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