View more on these topics

HFC may face big payouts to remedy PPI misselling

HSBC-owned HFC Bank may have to pay out over £11m after FSA action on misselling payment protection insurance.

The regulator fined HFC £1.5m last week for misselling PPI and industry experts suggest it will have to pay around £10m in compensation to missold customers. HFC got a 30 per cent discount by settling at an early stage, bringing the fine down to £1,085,000.

But managing director Simon Burgess says: “The remedial action that the FSA has forced on the firm will cost 10 times more than the fine. The regulator should be praised for making a stand against such a large firm.”

HFC head of communications Patrick Long says: “The £10m figure is wild speculation that cannot be relied upon, he is simply plucking figures out of the air. We are implementing steps to ensure customers are not disadvantaged and where they were we would be looking at giving them money back. We expect that number to be very small, however.”

The regulator says the bank failed to ensure that advice it gave customers to buy PPI was suitable and failed to have adequate systems and controls in place for the sale of PPI. It says HFC put its customers at an unacceptable risk of being sold PPI when it was not suitable.

Between January 2005 and May 2007, HFC sold PPI on 75 per cent of the loans it provided. This amounted to a total of 163,000 policies, with around 124,000 being single-premium policies sold with unsecured loans.

FSA director of enforcement Margaret Cole says: “We are determined to see much better practice in the PPI market. We said in September we would be imposing higher fines for serious failings in the retail market, including against firms who fall short in relation to PPI. The fine against HFC – the biggest PPI fine to date and the first since our September announcement – is evidence of our determination in this area. HFC’s failings put its customers at risk of buying unsuitable protection insurance and the financial impact on them of unsuitable advice was likely to be significant.” managing director Shane Craig says until the point of sale of unsecured loans and PPI are separated, consumers will continue to spend huge sums on protection that is inappropriate and overpriced.

He says: “The fact that 76 per cent of the policies sold by HFC Bank over the period scrutinised by the FSA were single-premium policies for unsecured loans makes it blindingly obvious that this is where the problem lies.”


Sumus doubles profit and revenue

Sumus has almost doubled its operating profit and turnover and saw a 76 per cent growth in pre-tax profit over the last year, to £1.51m. Sumus, the Aim-listed holding company for Falcon Group, Financial Synergies and Financial Support and Advice Services saw a 96 per cent increase in revenue, from £15.2m to £29.8m. It also […]

Warren Buffett buys up 3% of Swiss Re

Billionaire Warren Buffett’s Berkshire Hathaway group has taken a three per cent holding in the world’s largest reinsurer, Swiss Re.Buffett paid £420m for the stake. As a result of the deal Swiss Re has announced an extra £821m buyback of equity over the next 18 months, which has reassured investors.Berkshire Hathaway has also entered into […]

Flowers set for Friends £4bn bid

JC Flowers is considering an offer for Friends Provident, believed to be around £4bn.It has built up a 2.7 per cent stake in Friends and says it would approach the board with a view to making an offer thought to value the company at 175p per share.It is thought the private equity firm is waiting […]

Take account of requirements for the RMAR

In 2007 we undertook a review of electronic reporting, looking at how firms complete their retail mediation activities return, the issues they faced and what further help we could provide to make the submission process easier.We said we were pleased with submission rates, as over 90 per cent of firms submit on time, and that […]

Testing the Foundation

The global economy isn’t headed into recession, at least not yet. This month, David Lafferty, Chief Market Strategist at Natixis Global Asset Management, examines current capital market and portfolio risks for signs of recession. Click Here for Capital Market Notes


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm