Insurance provider Swinton has been fined £770,000 by the Financial Services Authority (FSA) for mis-selling Payment Protection Insurance (PPI).
The move follows an investigation by the city regulator which found that Swinton was not checking whether customers had any real need for the cover. The insurer will now refund over 350,000 customers after it was found to have charged between £15 and £20 for motor and home insurance policies which cost it just £1.21.
Breach of the rules
Swinton, which stopped selling PPI in March 2008, accumulated £7.8m from its PPI sales. Over 500,000 policies were sold in total, but only 266 claims were ever paid out.
The FSA said that the provider had avoided a larger fine of £1.1m by agreeing to settle at an early stage.
Swinton let off lightly, says Which?
‘This is a truly shocking case’, said Which? personal finance campaigner, Vera Cottrell. ‘As an insurance broker, Swinton is supposed to give tailored advice to its customers. Instead, it saddled thousands of people with unnecessary and unsuitable insurance.
‘Customers should get an automatic refund. Too few people are likely to claim back £15 or £20, which would mean Swinton is getting let off lightly, especially given the fine imposed by the FSA is just a tenth of the revenue it generated from PPI sales.
‘What’s more, we think the FSA should take action against the senior management responsible for this systematic breach of the rules.’
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