Record fine for A&L for mis-selling PPI
by Kay Murchie
The Financial Services Authority (FSA) has given Alliance & Leicester (A&L) a record fine of £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 £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 FSA’s investigation. Previously, the largest fine was £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 ‘shortcomings’ 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 £1.4 billion a year.
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