FSA fines Capital One over payment protection policies
The Financial Services Authority (FSA) has fined Capital One £175,000 after the company did not give adequate information to customers who bought payment protection insurance (PPI) that they thought would pay off their credit card bills in case they became ill or lost their jobs. The fine came after GE Capital bank was fined £610,000 for similar failures to disclose.
The FSA said that Capital One, one of the UK’s largest credit card providers, had not sent any documentation of policy provisions to over 50,000 customers between January 2005 and April 2006. In addition, sales pitches for the PPI policies were said not to adequately disclose what the policies included and excluded, and sales calls were not monitored closely enough.
An official of Capital One said that it had accepted the fine and has altered its sales procedures in order to fix the problems pointed out by the FSA. The official also said that it had offered complete cooperation to the FSA during the investigation.
The FSA has been looking into the PPI industry for some time, and more fines are expected to be levied against other banks and credit card companies. The FSA director of enforcement said that the lack of information disclosed about the terms of PPI policies was unfair and unacceptable to customers.