The FSA has fined high-street insurance broker Swinton Group £770,000 for serious failings in its advised sales of single-premium payment protection insurance.
The company has been told to refund over 480,000 PPI policies held by 350,000 customers.
The regulator found that between December 2006 and March 2008 the firm’s PPI sales process was flawed. PPI was automatically included in insurance quotes without first establishing that the customer had any real demand or need for the cover.
Swinton failed to make it clear that PPI was optional and did not properly disclose the cost of PPI at the point of sale.
The cost was bundled within the initial insurance quote and Swinton failed to disclose, before the sale completed, that the policy only cost £1.21. The remainder of the £15 or £20 charge was a fee taken by Swinton. Swinton has agreed to review previously rejected claims and pay compensation where appropriate.
It accrued around £7.8m from its PPI sales before the regulator forced it out of the PPI market in March 2008 when the failings came to light.
By settling at an early stage of the investigation, Swinton qualified for a 30 per cent reduction on the full fine, which would have been £1.1m.
FSA director of retail enforcement and financial crime Margaret Cole says: “These were deliberate breaches. Swinton was fully aware that it should establish a customer’s need for PPI before recommending it, yet nearly half a million policies were sold to customers who did not necessarily require them. Swinton’s PPI sales fell a long way short of our requirements and the firm clearly failed to treat customers fairly.”
In a statement, Swinton says: “Swinton takes the matter very seriously and will be contacting all customers concerned. The company apologises to any customer affected and has set up a dedicated unit to deal with the PPI cases.”