Alliance & Leicester fined £7m over serious PPI failings
LONDON - UK regulator the Financial Services Authority (FSA) has fined Alliance & Leicester a record £7 million ($12.2 million) for the worst case yet of mis-selling payment protection insurance (PPI). The regulator said the UK bank had sold approximately 210,000 PPI policies over three years at an average price of £1,265.
According to the regulator, the bank had failed to give enough information about the PPI or to make it sufficiently clear whether the insurance costs were optional. It instead sought reasons to sell the insurance without considering the consumer's needs, and trained staff to put pressure on customers who queried the inclusion of a PPI package with their loan repayment.
Margaret Cole, FSA director of enforcement, says: "The failings 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."
Alliance & Leicester's fine marks a major enforcement of the FSA's Treating Customers Fairly (TCF) initiative. The regulator has said 2008 is the year of reckoning for TCF. The bank has agreed to write to every customer who took out an unsecured loan between January 14, 2005 and December 31, 2007, prompting them to review their policy against product information sent to them.
The bank will also review relevant rejected complaints and claims and pay compensation to those affected. By co-operating and carrying out these measures, the bank gained a 30% reduction on the full £10 million penalty.
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