GE Capital - the bank which is behind many High Street store cards - has been fined £610,000 ($1.2 mln) for mis-selling payment protection insurance (PPI).
The Financial Services Authority (FSA) said the group had failed to have adequate controls over insurance sales and failed to treat customers fairly. PPI is a form of insurance that covers people in case they cannot pay loans as a result of illness or unemployment. The fine is the biggest imposed by the FSA over PPI mis-selling so far. The PPI industry is worth an estimated £5.5 billion (€8.3 billion)a year. Competition Office have been carrying out a widespread investigation into the industry, and earlier this month the BBC learned that 10 banks and lenders would face fines following the probe. In a statement, the FSA said it had acted as GE Capital had not reviewed its sales procedures, despite widespread evidence which emerged in 2005 that it was failing to meet recommended sales practices. Failings pointed out by the FSA included: not ensuring that customers had adequate information before signing up for a policy, failure to make sure staff were trained properly, not monitoring or managing information properly, failing to contact customers that the bank found had been mis-sold PPI in an effort to remedy the situation.
The bank has now agreed to take action to resolve the problems. GE Capital provides many of the store cards that people are offered in High Street shops. About 300,000 shop staff sell insurance for the cards on behalf of the company. According to the FSA, more than 850,000 policies which included PPI were sold by GE Capital in 2005. „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,” FSA director of enforcement Margaret Cole said. „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.” (BBC NEWS)