The regulator fined the firm for adding PPI to the quotation of unsecured loans without the customer asking for it.
FSA director of enforcement Margaret Cole says Liv Vic’s sales process was flawed in its design.
She says: “When customers phone for a quote, it is totally unacceptable for firms to add on the cost of insurance which the customer has not asked for. Many customers make their decisions when speaking to sales staff.
“If those conversations are unclear or misleading it will be no defence for firms to say that full details were included in paperwork which customers received later.”
A statement released by the firm, which has now stopped all sales of PPI, says Liv Vic apologises to customers for any past shortcomings in the PPI sales process. It says it has proactively launched an appropriate customer redress programme and will be writing to all customers affected.
The FSA acknowledges Liv Vic’s comprehensive programme to contact its customers and pay them compensation where appropriate.