FSA fines two UK firms in major TCF crackdown

For two years HFC - a subsidiary of HSBC - sold PPI to 163,000 customers but failed to provide suitable advice, or put adequate systems and controls in place. The firm did not require its advisers to gather enough information on customers' financial circumstances, explain fully why they recommended a sale, or identify to customers any demands and needs that the policy would not meet.

Taking out PPI - designed to protect against unemployment or illness - is the most lucrative form of UK insurance. It can add costs of £3,000 to a £7,500 loan. The bank joins 11 other firms fined for mis-selling PPI, including GE Capital Bank, which was fined £610,000, and Capital One Bank, which was fined £175,000.

Meanwhile, stockbroker Square Mile was fined £250,000 for using persistent high-pressure sales tactics and misleading information to sell consumers shares they did not want or could not afford. The firm deals in derivatives and securities sold on the Alternative Investment Market and PLUS markets, which provide primary and secondary trading services for smaller capitalised and emerging companies. Examples of the firm's sales tactics included telephoning one customer 17 times in 10 days, and selling almost £300,000 of high-risk securities to an 89-year-old customer without permission. The penalties to HFC and Square Mile mark a significant increase in enforcement of the principles of the FSA's Treating Customers Fairly (TCF) initiative.