The Financial Services Authority has fined GE Capital Bank Ltd (GECB) £610,000 for failing to have adequate systems and controls for selling insurance which includes Payment Protection Insurance (PPI) and for failing to treat its customers fairly.
GECB sells general insurance policies, which include PPI, mainly on store cards offered by leading high street retailers. The insurance – often described as "Account Cover" – is sold in shops across the UK. The store cards are usually branded in the name of the retailers and the insurance is mostly offered to customers at the till when they are applying for a store card. If not bought at the till, customers are contacted later by GECB's telesales staff.
At any one time, approximately 300,000 retail assistants employed by the stores are permitted to sell insurance on behalf of GECB. In 2005 alone, over 850,000 policies which included PPI were sold on its behalf.
FSA Director of Enforcement Margaret Cole says: "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.“
The FSA found that GECB failed to review and amend its procedures for selling insurance in light of its own evidence, emerging in 2005, of widespread non-compliant selling practices.
This is the first of about 10 big-named banks and lenders who expect to be fined by the FSA for a failure to treat customers fairly in relation to the sale of PPI.
Health and life insurance: News update: February 2007