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FSA issues £455,000 PPI fine to Loans.co.uk

The FSA has fined Loans.co.uk £455,000 for failing to treat its customers fairly when selling PPI in a further sign the regulator is cracking down in this area.
The FSA says it found the firm did not have appropriate systems and controls in place to minimise the risk of unsuitable sales.
At this week’s Treasury select committee meeting FSA chief executive John Tiner told MPs the regulator was considering enforcement action against 10 further firms after recently handing out its first fine for PPI misselling since it began regulating the GI market.
But this fine of £455,500 if significantly larger than the £56,000 handed out to Regency Mortgage Corporation in September.
By agreeing to settle at an early stage the firm qualified for a 30 per cent discount under the FSA’s Executive Settlement Scheme- without the discount the penalty would have been £650,000.
At LCUK PPI was sold on an advised basis over the telephone and an FSA investigation found the firm failed to gather and record information to show the policy recommendations it made were suitable.
The FSA says it discovered customers did not receive enough information at the point of recommendation to make an informed decision about the PPI policy being offered and therefore customers could not be sure if LCUK’s recommendation was the right option for them.
LCUK’s breaches exposed around 14,400 customers to the risk of the sale of PPI which was unsuitable for their needs. A remedial action plan for consumers has been implemented by the firm involving a customer contact exercise and redress where appropriate.
FSA head of enforcement Margaret Cole says: “We have highlighted Payment Protection Insurance as an FSA priority due to the potential level of risk to consumers. Loans.co.uk Limited failed to make sure adequate processes were in place to ensure the suitability of its PPI recommendations and treat its customers fairly. The principle of Treating Customers Fairly should be embedded in firms’ business models to help prevent such failings and it is important that all firms review their systems and controls to reach this standard.
PPI can provide valuable protection against changes in personal circumstances But customers should come away from the sale having been given the best possible information to understand that the PPI is optional, what the policy will and will not cover and how much it costs. We encourage consumers to ask straightforward questions of sales staff when PPI is mentioned to help them to identify whether the product is right for them.”
Loans.co.uk chief executive Stephen Hayes says: “Loans.co.uk is committed to providing its customers with a high level of service. We co-operated fully with the FSA and undertook an internal audit review to ensure effective and timely resolution of the issues identified. New practices have been in place for the past six months”.

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