The Financial Services Authority (FSA) has fined Alliance & Leicester £7million for mis-selling Payment Protection Insurance.
The City watchdog said that between 2005 and 2007 Alliance & Leicester telephone sales staff had failed to make clear that insurance for its loans was optional. It also found that staff were trained to put pressure on customers who queried the inclusion of PPI.
PPI is sold alongside loans, credit cards, finance agreements and mortgages to cover repayments if people are off work because of illness or unemployment. Which? research has found that as many as 2 million people have a PPI policy that they will never be able to claim on.
Only 11% of people with PPI will ever be able to make a successful claim. Often people who are self employed or on a fixed term job contract aren’t covered by PPI, nor are many people aged 65 and over, or people who might claim for absences relating to pre-existing medical conditions.
Which? chief executive Peter Vicary-Smith has praised the FSA’s decision to fine Alliance & Leicester. He said: ‘It’s great to see the FSA hitting companies where it hurts. This record PPI fine should send out a clear message to other companies that mis-selling will be severely punished.
‘Now the fine has been set, we want everyone who was mis-sold to get their money back. This can be done by ensuring that any communications to consumers are clear and straightforward about their rights.
‘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.’
A&L has apologised and promised to pay back any customers who have lost out through mis-selling. Chief executive David Bennett said: ‘Customers can be assured that we are taking this matter very seriously and that we have reviewed and tightened up our processes from December 2007 to ensure that all customers get the right information and advice.’
All customers who were sold PPI by phone between January 14 2005 and December 31 2007 will be sent a letter which will ‘set out the issues and offer the opportunity to raise any concerns.’
How to claim on PPI
Which? has advice on how to tell if you’ve been mis-sold PPI.
* For daily consumer news, subscribe to the Which? news RSS feed. If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/reviews/news.xml.
Find out more about RSS in the Which? guide to RSS news feeds.