The Financial Services Authority has confirmed that it has handed down its heftiest fine yet in relation to the sale of Payment Protection Insurance cover, or PPI. The UK’s financial regulator has fined the HFC Bank £1 million for breaches in relation to its sale of PPI. HFC trades under the name Beneficial Finance, as is part of the HSBC Group. PPI is designed to cover repayments on finance for a specified period of time if the borrower cannot make repayments due to sickness, accidents, or redundancy.
In a recent review of PPI regulators had found that many consumers were being sold PPI policies that were not appropriate for them by some lenders. Others were adding PPI onto finance without the customer knowing, and some were simply failing to provide adequate information about the policies to enable the consumer to make an informed decision. In some cases consumers were being put under the impression by some lenders that they had to take out PPI to get finance.
HFC was found to have a number of failings in its sale of PPI, which the FSA stated was putting customers at risk of being mis-led about policies and mis-sold policies.
An FSA official said: ‘We are determined to see much better practice in the PPI market. We announced in September 2007 that we would be imposing higher fines for serious failings in the retail market including against firms who fall short in relation to PPI.’
She added: ‘The fine against HFC – the biggest PPI fine to date and first since our September announcement – is evidence of our determination in this area. HFC’s failings put its customers at risk of buying unsuitable protection insurance and the financial impact on them of unsuitable advice was likely to be significant.’
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