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| Lenders face debt insurance fines | Lenders face debt insurance fines |
| (about 2 hours later) | |
| Up to 10 banks and lenders are expected to be fined for mis-selling payment protection insurance (PPI) in coming weeks, the BBC has learned. | |
| The Financial Services Authority (FSA) is set to fine them about £1m each, said BBC Business Editor Robert Peston. | |
| PPI is a widely sold form of insurance that covers people in case they cannot pay their mortgages or other loans as a result of illness or unemployment. | PPI is a widely sold form of insurance that covers people in case they cannot pay their mortgages or other loans as a result of illness or unemployment. |
| Consumer groups have criticised PPI as a "protection racket". | Consumer groups have criticised PPI as a "protection racket". |
| Some "big names" can expected to be fined in coming weeks, Mr Peston said. | Some "big names" can expected to be fined in coming weeks, Mr Peston said. |
| Financial costs | Financial costs |
| But while the fines will be small for major lenders, news of the penalties could prompt customers who believe they were mis-sold PPI policies to launch compensation claims. | But while the fines will be small for major lenders, news of the penalties could prompt customers who believe they were mis-sold PPI policies to launch compensation claims. |
| It's humiliation time again for banks and lenders Robert Peston, BBC Business Editor Analysis: PPI penalties | It's humiliation time again for banks and lenders Robert Peston, BBC Business Editor Analysis: PPI penalties |
| "So the financial cost for the lenders could become more significant," Mr Peston added. | "So the financial cost for the lenders could become more significant," Mr Peston added. |
| Earlier this month the FSA said it would be carrying out a new drive in the coming six months to improve sales standards at firms which sell PPI. | Earlier this month the FSA said it would be carrying out a new drive in the coming six months to improve sales standards at firms which sell PPI. |
| It warned that it may also tighten the rules on selling these types of policies as it is not convinced that they offer customers enough protection. | It warned that it may also tighten the rules on selling these types of policies as it is not convinced that they offer customers enough protection. |
| Last year the OFT concluded a five-month investigation into PPI by describing it as a type of insurance that failed consumers because too often it gave them a poor deal and offered less protection than they thought. | Last year the OFT concluded a five-month investigation into PPI by describing it as a type of insurance that failed consumers because too often it gave them a poor deal and offered less protection than they thought. |
| So far three companies - Regency, Loans.co.uk, and the retail group Redcats - have been fined £781,000 between them for mis-selling the policies. | So far three companies - Regency, Loans.co.uk, and the retail group Redcats - have been fined £781,000 between them for mis-selling the policies. |