Insurance company banking subsidiary Liverpool Victoria Banking Services (LVBS) has been fined £840,000 by the FSA for failings in the sale of Payment Protection Insurance (PPI).
The firm will also be required to pay compensation to customers who bought PPI when seeking unsecured loans between 14 April 2005 and 8 August 2007.
According to the FSA, customers that phoned LVBS to obtain an unsecured loan had the cost of PPI added to their quote without having asked for it.
LVBS was also found to be placing pressure on customers who said they did not want to buy the PPI.
Customers were also given insufficient and misleading information about the features and limitations of the PPI offered. The FSA reviewed 97 calls and found more than 60% were non-compliant.
The fine is the seventh given to a firm for poor PPI selling, the largest of which was a £1.085m fine for HFC Bank.
In addition to paying a fine, LVBS is required to automatically repay and interest paid on a PPI premium that was added to a customer’s loan. The firm must also write to PPI customers asking them to consider their policy and must pay redress where it is due.
Margret Cole, director of enforcement at the FSA, says: “The LVBS sales process was flawed in its design. The firm has stopped all sales of PPI and is now proposing a comprehensive programme to contact its customers and pay them compensation where appropriate. The FSA expects firms to treat customers fairly, particularly when failings have been identified. This proposal for remedial action sets an example for other firms to follow.”
Income protection insurance: News update: August 2008