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Broker fined for PPI mis-selling Broker fined for PPI mis-selling
(about 1 hour later)
A fine of nearly half a million pounds has been imposed on a credit broker for mis-selling Payment Protection Insurance (PPI).A fine of nearly half a million pounds has been imposed on a credit broker for mis-selling Payment Protection Insurance (PPI).
Loans.co.uk was fined £455,000 by the Financial Services Authority (FSA).Loans.co.uk was fined £455,000 by the Financial Services Authority (FSA).
The 14,400 customers who were sold the policies may not have needed them and were not given enough information to make a proper decision.The 14,400 customers who were sold the policies may not have needed them and were not given enough information to make a proper decision.
Last week the Office of Fair Trading referred the PPI industry to the Competition Commission.Last week the Office of Fair Trading referred the PPI industry to the Competition Commission.
After a five-month investigation, the OFT concluded that the sale of PPI policies, worth around £5bn a year, offered a "poor deal and often less protection than [consumers] think". After a five-month investigation, the OFT concluded that the sale of PPI policies, worth about £5bn a year, offered a "poor deal and often less protection than [consumers] think".
The insurance is supposed to provide people with protection if they fall ill or lose their jobs and can no longer afford to pay credit card bills, loan repayments or their mortgages.The insurance is supposed to provide people with protection if they fall ill or lose their jobs and can no longer afford to pay credit card bills, loan repayments or their mortgages.
Particularly seriousParticularly serious
The FSA was very critical of the way that Loans.co.uk - a licensed credit broker - had been selling the insurance, typically over the telephone.The FSA was very critical of the way that Loans.co.uk - a licensed credit broker - had been selling the insurance, typically over the telephone.
Loans.co.uk Limited failed to make sure adequate processes were in place Margaret Cole, FSA
It said the company had not treated its customers fairly, because they were not given enough information at the point of sale to make an informed choice.It said the company had not treated its customers fairly, because they were not given enough information at the point of sale to make an informed choice.
Also, the company did not keep proper records to show that its advice had been correct.Also, the company did not keep proper records to show that its advice had been correct.
Because of the large number of customers involved, the breach of the regulations by the company had been particularly serious.Because of the large number of customers involved, the breach of the regulations by the company had been particularly serious.
Margaret Cole, FSA director of enforcement, said: "Loans.co.uk Limited failed to make sure adequate processes were in place to ensure the suitability of its PPI recommendations and treat its customers fairly. "Loans.co.uk Limited failed to make sure adequate processes were in place to ensure the suitability of its PPI recommendations and treat its customers fairly," said Margaret Cole, FSA director of enforcement.
"Customers should come away from the sale having been given the best possible information to understand that the PPI is optional, what the policy will and will not cover and how much it costs.""Customers should come away from the sale having been given the best possible information to understand that the PPI is optional, what the policy will and will not cover and how much it costs."
Last month, a firm called Regency Mortgage Corporation was fined £56,000 by the FSA for mis-selling PPI policies.Last month, a firm called Regency Mortgage Corporation was fined £56,000 by the FSA for mis-selling PPI policies.
Football sponsors
Loans.co.uk is based in Watford and Preston and employs about 400 staff.
Loans.co.uk sponsors Watford FC
It sponsors both Watford and High Wycombe football clubs.
As well as poor selling, the FSA found the firm did not have a proper procedures for making sure its sales force complied with the regulations.
Also, it did not tell the staff how to deal properly with any complaints.
The company has now agreed to get in contact with its customers who may have been mis-sold the PPI insurance and will offer them their money back if it becomes clear they did not need it.
Stephen Hayes, chief executive of Loans.co.uk, said it had taken steps to improve its methods.
"We co-operated fully with the FSA and undertook an internal audit review to ensure effective and timely resolution of the issues identified," he said.
"New practices have been in place for the past six months."
Loans.co.uk would have been fined 30% more - £650,000 - if it had not agreed to settle the case early on.