LV fined over PPI sales flaws
September 19, 2008
According to a recent report Liverpool Victoria Banking Services was recently fined £840,000 as a result of serious flaws in relation to its sale of Payment Protection Insurance. This type of cover, known simply as PPI, has been at the centre of controversy for some time, after industry regulators found evidence that it had been mis-sold for years, and in some cases had been added on to finance by lenders without the customers even being aware.
The fine was imposed by the Financial Services Authority, which found a number of serious failing where the sale of PPI was concerned. The agency claims that in many cases LVBS was adding the cost of PPI to quotes for customers without their knowledge. As a result of the findings LVBS will now have to refund PPI payment interest to around 14,500 customers who took out policies between 2005 and August 2007.
This is the second largest fine that has been handed out by the FSA in relation to PPI sales, with HFC Bank having been fined £1 million by the agency earlier this year, again in relation to PPI sales. It was found that LVBS did not explain that PPI had been added to personal loans, so customers often had the cover without even knowing it, and ended up paying an average cost of £1600 including interest just for the insurance.
An official from the FSA said: “We have made it abundantly clear that firms must ensure their PPI sales processes are up to the required standards and must change their behaviour where necessary. The LVBS sales process was flawed in its design.”
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