Liverpool Victoria Banking fined over PPIWhich? says fine shows mis-selling still a problem
31 July 2008
Liverpool Victoria Banking Services has been fined £840,000 over ‘serious failings’ in the way it sold payment protection insurance (PPI).
The Financial Services Authority (FSA) said the group automatically added the cost of the cover to loan quotes without customers asking for it.
If customers then realised they didn't have to buy the cover and objected, the FSA said the group put pressure on them to take the cover.
PPI is sold by many banks and credit card companies when you take out a new loan or card. It's designed to cover your repayments if you become unable to work due to certain illnesses or injuries, or if you lose your job.
The financial services watchdog said Liverpool Victoria Banking Services also provided ‘inadequate information’ to telephone customers about the features, exclusions and limitations of PPI.
Instead, the information it gave out was unclear, unfair or misleading.
Staff also failed to explain to customers that the cost of the insurance was added to their loan, and that as a result they would pay interest on the premium for the life of the loan.
Interest on PPI payments will be repaid automatically to 14,500 customers who took policies from Liverpool Victoria Banking Services between January 2005 and August 2007.
FSA director of enforcement Margaret Cole said: ‘When customers phone for a quote, it is totally unacceptable for firms to add on the cost of insurance which the customer has not asked for.
‘Many customers make their decisions when speaking to sales staff. If those conversations are unclear or misleading it will be no defence for firms to say that full details were included in paperwork which customers received later.
‘We have made it abundantly clear that firms must ensure their PPI sales processes are up to the required standards and must change their behaviour where necessary.’
Which?'s head of campaigns, Louise Hanson, said: ‘This proves that PPI is still being mis-sold. Even more worryingly, it went on for two and a half years in this case before the FSA stepped in.
‘While it’s good to see firms being hit in the pocket for mis-selling, the FSA and industry need to do more to stop it happening in the first place.
‘Anyone who has a personal loan or credit card should check whether they have a PPI policy and, if they think it was mis-sold to them, should consider making a complaint.’
Liverpool Victoria Banking Services said it apologised to customers ‘for any past shortcomings in the PPI sales process’.
The firm said that it would be writing to all customers affected.
It added: ‘The FSA acknowledges that the redress programme, which includes automatically refunding interest charged on PPI premiums, is substantial and comprehensive.’
The fine is the second largest to be handed out by the FSA for PPI failings. HFC Bank - part of banking group HSBC - was fined almost £1.1m in January.