Two more companies have been penalised for breaking the rules on the sale of payment protection insurance (PPI). The regulator (The Financial Services Authority-FSA) is determined to control slapdash attitudes to insurance rules - however big the retailer, bank or service company is. It aims to punch home the message that the rules are not optional.
Home shopping group Redcats was fined £270,000 for failing to treat up to 160,000 customers fairly when selling PPI. Bradford-based Redcats, whose brands include Empire Stores and La Redoute, did not have adequate systems and controls in place to minimise the risk of unsuitable sales of PPI to cover instalment payments for goods bought from the firm's catalogues The company's breaches were "particularly serious" because they meant that about 160,000 customers were sold cover which might not have been suitable for their individual needs, said the FSA.
Payment protection insurance is most commonly taken out by people to cover debt repayments if they are unable to work due to illness, injury or if they lose their job. It is often sold by banks when people take out a new loan or credit card and is also offered by retailers, car dealerships and other businesses. There are cheaper stand- alone policies on the market (see the guide to types of income protection insurance and PPI).
The FSA has designated PPI a priority because of the potential risks to consumers. Its clampdown follows a recent investigation by the Office of Fair Trading, which criticised the high street banks, credit card companies and other lenders that sell PPI, telling them the policies were a rip-off and often mis-sold.
The FSA has also imposed a "public censure" on Edinburgh-based Eastern Western Motor Group, a car dealership, for failures relating to the sale of policies linked to vehicle financing.
Home shopping group Redcats was fined £270,000 for failing to treat up to 160,000 customers fairly when selling PPI. Bradford-based Redcats, whose brands include Empire Stores and La Redoute, did not have adequate systems and controls in place to minimise the risk of unsuitable sales of PPI to cover instalment payments for goods bought from the firm's catalogues The company's breaches were "particularly serious" because they meant that about 160,000 customers were sold cover which might not have been suitable for their individual needs, said the FSA.
Payment protection insurance is most commonly taken out by people to cover debt repayments if they are unable to work due to illness, injury or if they lose their job. It is often sold by banks when people take out a new loan or credit card and is also offered by retailers, car dealerships and other businesses. There are cheaper stand- alone policies on the market (see the guide to types of income protection insurance and PPI).
The FSA has designated PPI a priority because of the potential risks to consumers. Its clampdown follows a recent investigation by the Office of Fair Trading, which criticised the high street banks, credit card companies and other lenders that sell PPI, telling them the policies were a rip-off and often mis-sold.
The FSA has also imposed a "public censure" on Edinburgh-based Eastern Western Motor Group, a car dealership, for failures relating to the sale of policies linked to vehicle financing.
Related links |
Income protection insurance : News update: January 2007