PPI related fines for major UK lender

A major UK finance company has been hit with a fine of over six hundred thousand pounds by the Financial Services Authority over the mis-selling of payment protection insurance. The PPI (payment protection insurance) controversy has been ongoing for a while, with MPs in the UK expressing concerns over their constituents being ripped off by finance companies when it comes to this type of insurance cover. The Office of Fair Trading also expressed concern over the mis-selling of PPI, stating that often consumers were being talked into paying for payment protection insurance that was ineffective or in some cases could not even be used by them due to their circumstances.

Upon investigation of these PPI concerns the Financial Services Authority agreed that in many cases payment protection insurance was being sold to people that did not need it, or could not use it. The payment protection insurance cover is designed to cover repayments on the debt for a specified period in the event that the policy holder falls ill or is made redundant. However, for many people this type of cover is totally unsuitable and some people won’t ever be able to make a claim on it.

Since the eruption of the controversy over the PPI issue a number of lenders have been identified as having mis-sold this type of insurance cover and many of these could be fined over a million pounds by the FSA. The Financial Services Authority has already fined one company, GE Capital, finding the company over six hundred thousand pounds for the mis-sales of this type of cover. This finance company is the driving force behind many store cards or major high street retailers.

An FSA spokesperson stated: "Millions of people take out store cards every year. They need to know that PPI is almost always optional and should consider whether they need it before signing up. Our focus on Payment Protection Insurance will remain very high this year. We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly."