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Regulator gets tough on PPI with big fine

The FSA has fined Loans.co.uk £455,500 for failing to treat its customers fairly when selling payment protection insurance in a further sign that the regulator is taking an increasingly critical view of the product.

The regulator says it found that the firm did not have appropriate systems and controls in place to minimise the risk of unsuitable sales, exposing about 14,000 people to the risk of a missale.

At last 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 general insurance regulation began.

The £455,500 fine is significantly bigger than the £56,000 handed out to Regency Mortgage Corporation in September.

Loans.co.uk qualified for a 30 per cent discount of the initial £650,000 penalty by settling at an early stage.

PPI was sold on an advised basis over the telephone and an FSA investigation found that the firm failed to gather and record information to show that the policy recommendations it made were suitable.

The company has implemented a remedial action plan involving a customer contact exercise and redress where appropriate.

FSA head of enforcement Margaret Cole says: “Loans. co.uk failed to make sure that 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.”

Loans.co.uk chief executive Stephen Hayes says: “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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