Massive fine for A&L over PPI
November 3, 2008
The Financial Services Authority has come down hard on one lender over the mis-selling of payment protection insurance, or PPI, fining it a record £7 million. Following investigations the UK’s financial regulator has fined the lender for three years of mis-selling the controversial payment protection cover with its financial products.
Payment protection insurance has been at the centre of controversy for some years, due to rising evidence that it has been mis-sold to those that do not want it or cannot benefit from it.
It was found during the investigation that employees of the Alliance and Leicester had been trained to use persuasive tactics on consumers that queried the inclusion of PPI with their financial agreements. The lender has now apologised for these issues, and has promised that it will pay back affected customers. Between January 2005 and the end of 2007 the lender sold around 210,000 PPI policies with its loans, with a cost averaging around £1265.
The FSA said that employees of the lender had failed to provide details of PPI costs to consumers on the phone, and that they had been trained to recommend insurance that consumers may not need, want, or even qualify for.
An official from the FSA said: “The failings at A&L are the most serious we have found. This is reflected in the record PPI fine.”
The Chief Executive of A&L said: “I apologise sincerely for our shortcomings. Customers can be assured that we are taking this matter very seriously and that we have reviewed and tightened up our processes from December 2007 to ensure that all customers get the right information and advice.”
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