Record fine for A&L for mis-selling PPI

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The Financial Services Authority (FSA) has given Alliance & Leicester (A&L) a record fine of A?7 million for mis-selling payment protection insurance (PPI).

The FSA found that the bank had trained its staff to put pressure on customers who questioned the inclusion of optional PPI in a loan.

During the period January 2005 to December 2007, A&L sold around 210,000 PPI policies to customers looking for a personal loan with each policy averaging A?1,265.

PPI policies cover monthly payments for goods, services or loans during illness and redundancy and have been the result of bad press lately after a recent report revealed that 2 million customers have been sold potentially worthless PPI.

According to many experts, the policies are said to be mired in small print and are very difficult for customers to make a claim.

A&L, which is the eighteenth company fined for mis-selling PPI, would have faced a much heftier fine but agreed to settle at an early stage of the FSAa��s investigation. Previously, the largest fine was A?1 million given to HFC Bank, a subsidiary of HSBC.

According to Margaret Cole of the FSA, the mis-selling at A&L are the most serious it have found and is reflected in the record fine.

Meanwhile, David Bennett, group chief executive of A&L, has apologised for its a�?shortcomingsa�� and said it would reimburse people.

Peter Vicary-Smith, chief executive of consumer group Which?, advises anyone who has a personal loan or credit card to check whether they have a PPI policy and should consider making a complaint if they think it was mis-sold to them.

The Competition Commission recently found insurers were overcharging their PPI customers by A?1.4 billion a year.

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