A&L fined £7m for mis-selling PPI
by Gill Montia
Story link: A&L fined £7m for mis-selling PPI
The Financial Services Authority (FSA) has fined Alliance & Leicester (A&L) a staggering £7 million for serious failings in its sales of payment protection insurance (PPI).
The regulator found that for the period from January 2005 to December 2007, A&L sold approximately 210,000 PPI policies to customers seeking a personal loan.
The average cost of a policy was £1,265 but the bank’s advisers generally failed to give customers details of the cost.
Sales staff also encouraged the sale of PPI without properly considering what customers needed and did not make it sufficiently clear that PPI was optional when taking out a loan.
A&L actually trained its staff to put pressure on customers to buy the insurance should the inclusion of the PPI premium in a quotation be queried, or an adviser’s recommendations challenged.
The FSA’s director of enforcement, Margaret Cole, says the failings at A&L are the most serious ever to have been found by the FSA, a fact reflected in the size of the fine.
She also believes that the case highlights the need for the Authority to continue to step up its action when firms do not sell PPI properly and has warned that firms cannot rely on paperwork sent out to the customer later, as an excuse for unclear or misleading statements given on the telephone.
A&L qualified for a 30% reduction in its penalty by settling at an early stage of the FSA’s investigation.
In related news, the bank says it has secured legal approval for its £1.4 billion takeover by Santander, the Spanish banking group that owns Abbey.
The deal will give A&L shareholders one Santander share for every three A&L shares held.
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