It is the largest FSA fine for PPI misselling and the third biggest ever penalty handed out by the regulator after Shell was fined £17m in 2004 for market abuse and Citigroup fined £14m in 2005 for failures in its conduct of business.
In a final notice the FSA says A&L’s failings are the “most serious” it has seen and that in telephone sales of PPI on unsecured loans, the bank failed to give customers full details of the costs and sought reasons to sell the product without properly considering the customers’ needs.
The FSA says A&L did not make it sufficiently clear that PPI was optional and it trained its staff to put pressure on customers where they queried the inclusion of PPI in their quotation or challenged advisers’ recommendations.
The regulator says the failings resulted in unacceptable levels of non-compliant sales and a high risk of unsuitable sales over the three year period.
The fine relates to telephone sales between 14 January 2005 and 31 December 2007.
FSA director of enforcement Margaret Cole says: “The failings at A&L are the most serious we have found. This is reflected in the record PPI fine. It is very disappointing that after three years of regulation we are still finding serious problems in PPI sales.”
She adds: “This case shows that we will continue to step up the action we take when firms do not sell PPI properly.
“It is particularly unacceptable for a firm to train its advisers to put pressure on customers when recommending insurance cover which they have not asked for and may not need.”
A&L says it will implement a customer contact programme, overseen by third party accountants, to ensure that its customers are not disadvantaged and has committed to pay redress where appropriate.
Group chief executive David Bennett says: “I apologise sincerely for our shortcomings.
“We will be writing to every customer concerned and will be working with independent accountants and the FSA to ensure that we put right any disadvantage identified.”
He adds: “Customers can be assured that we are taking this matter very seriously and that we have reviewed and tightened up our processes from December 2007 to ensure that all customers get the right information and advice.”