Reclaim Alliance & Leicester PPI
Alliance & Leicester plc received a fine from the Financial Services Authority (FSA) for serious mis-selling of Payment Protection Insurance (PPI) via phone sales. During the period of January 2005 and December 2007 210,000 PPI policies were sold by A&L to customers taking out personal loans. These averaged a price of £1,265.
Penalty given: £7,000,000
Reasons for this penalty:
- Breaches in relation to the advice given during sales of single premium PPI that was offered in connection of unsecured loans
- Failing to ensure that suitable advice was given to customers who relied on their judgement
- Failure to provide adequate risk management systems
- Lacking effective and responsible care when organising and controllings their affairs
- Failing to treat their customers fairly
- Generally failing to provide clear, fair and none misleading information to consumers including the failure to provide customers with the costs of PPI
- Flawed PPI telephone sales process which usually included A&L providing customers with inaccurate and/or misleading information
- Failure to make customers aware that PPI was optional and would use forceful and innappropriate sales techniques on customers who refused or questioned it
- Failing to gather and considering customers personal information and circumstances before selling them PPI
- Lack of effective systems when monitoring and training their advisers
What the FSA said:
“The failings at A&L are the most serious we have found. This is reflected in the record PPI fine. It is very disappointing that after three years of regulation we are still finding serious problems in PPI sales.
This case shows that we will continue to step up the action we take when firms do not sell PPI properly. Customers should be able to rely on impartial advice based on their individual needs and demands. It is particularly unacceptable for a firm to train its advisers to put pressure on customers when recommending insurance cover which they have not asked for and may not need. Firms cannot rely on paperwork sent out later as an excuse for unclear or misleading statements given on the telephone.
As we said in our recent update on our PPI work, firms must ensure their PPI sales processes are up to the required standards. They must change their behaviour where necessary and if they are either unwilling or unable to sell this product in a compliant way, making sure that customers are treated fairly, they should not be selling it at all.”