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FSA fines used car firm £91k over PPI sales

The FSA has fined a used car sales company £91,000 for failures in the way one of its brands monitored the sale of payment protection insurance.

UK Car Group has been fined in relation to its Carcraft brand, which describes itself as the “UK’s leading car supermarket”, for failing to monitor Carcraft’s PPI sales between April 2007 and September 2008.

Based in Rochdale, Carcraft operates a network of dealerships in England and Wales. In addition to selling used cars, Carcraft also sold personal loans to finance the car sales, which in many cases included PPI.

Carcraft, an appointed representative of UKCG, sold PPI policies on an advised basis from several different providers. The most comprehensive policies covered loss of life, accident, sickness and involuntary unemployment.

In some cases credit agreements were split across two finance agreements and two different providers, in others the cost of the car was financed through one lender while the extended parts and labour guarantee was provided by another. When PPI was sold it was possible for customers to buy separate policies, either single or regular premium or both, to cover the different loans.

The FSA says while parent company UKCG ran a robust audit system of PPI sales, Carcraft’s own internal audits raised clear and detailed concerns with UKCG about the way PPI was being sold.

UKCG took a number of steps to address the concerns, such as giving advisers one on one feedback and training following an audit. However Carcraft continued to fail to record in enough detail the advice provided to its customers.  Concerns were also raised regarding staff competence, the monitoring of individual advisers and ensuring customers had a copy of completed documents.

The regulator says while UKCG took some steps to correct the concerns raised in the audits, it failed adequately to address them, meaning customers faced an increased risk of receiving unsuitable advice.

FSA head of retail enforcement Tom Spender says: “The risk of consumer detriment arising from the sale of PPI has long been highlighted by the FSA and this case emphasises the need for authorised firms, whether acting in their own right or as principals of appointed representatives, to ensure their own compliance systems and controls are robustly monitored and implemented effectively.”

UKCG stopped PPI sales in 2010 and has paid redress where appropriate.

A spokesman for Carcraft says: “Carcraft is disappointed the FSA has found it necessary to take action on an issue which occurred several years ago.  However, Carcraft has fully cooperated with the FSA’s investigation.” 



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