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FSA fines Egg £721,000 for PPI failings

The FSA has fined Egg Banking £721,000 for serious failings in its sales of credit card payment protection insurance and it is likely to have to pay significant sums in compensation.

The FSA found failings in approximately 40 per cent of telephone sales of credit card PPI made by Egg between January 2005 and December 2007.

Egg will also have to compensate customers who were missold.The FSA says Egg is expected to pay £1.67 million for every 10 per cent of customers who receive a refund.

According to the regulator, Egg sold PPI either when receiving a customer services call, or when making a sales call to a new customer.

When Egg customers said they did not want PPI on their credit cards, the firm directed its sales staff to use techniques to persuade the customer to take the insurance, called ‘objection handling’.

FSA director of enforcement Margaret Cole says: “Egg used inappropriate sales techniques to try to persuade customers to buy payment protection insurance on their credit card even when they asserted they did not want the cover. All firms must ensure that customers are treated fairly when selling PPI and if a customer does not want PPI, they should not be pressured into taking it.

“We will continue to fine firms where we find PPI failings. It is unacceptable that Egg did not identify the problems with its sales processes despite a series of high profile FSA communications on PPI, including earlier fines on other firms.”

An Egg spokesman says: “We are taking the matter very seriously and would like to apologise to any customers who have been affected. We will be contacting all customers impacted by this, giving them the opportunity to review whether the product was or is still suitable for them. A dedicated team of call centre staff will be ready to assist with customer enquiries on this issue.”


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