The Financial Services Authority (FSA) has today imposed fines totalling more than £175,000 on five motor retailers for serious breaches relating to the sale of Payment Protection Insurance (PPI), which exposed a total of 2,175 customers to the risk of being sold unsuitable PPI policies.
GK Group Limited, George White Motors Limited, Ringways Garages (Leeds) Limited, Ringways Garages (Doncaster) Limited and Park’s of Hamilton (Holdings) Limited sold PPI alongside loans for a car or motorbike.
Among the shortcomings identified:
• the firms failed to gather enough information about each customer (including pre-existing medical conditions, existing insurance cover and benefits received from employers), creating the unacceptable risk of unsuitable sales of PPI;
• the firms failed to monitor the quality of the advice given by sales staff and to ensure that appropriate sales processes were followed; and
• one firm did not adequately assess whether customers were eligible to claim for benefits from the PPI policies they sold, and another did not assess complaints properly.
Margaret Cole, FSA Director of Enforcement, said:
"Motor retailers that sell PPI have to meet the same standards as the rest of the financial services industry. All firms selling PPI must treat their customers fairly, including taking proper steps to make sure sales are suitable and customers are eligible to claim on the policy - PPI remains a top priority for the FSA in 2008 and beyond.
"Where we discover PPI failings, we will not hesitate to take tough action and impose higher penalties."
Each of the firms qualified for a 30% reduction in penalty by settling at an early stage of the FSA’s investigation. The FSA imposed financial penalties of £51,100 on GK Group Limited (£73,000 pre-discount), £28,000 on George White Motors Limited (£40,000 pre-discount), £61,600 on Park’s of Hamilton (Holdings) Limited (£88,000 pre-discount) and £35,000 together for Ringways Garages (Leeds) Limited & Ringways Garages (Doncaster) Limited (£50,000 pre-discount).
Some of the firms have stopped selling PPI as a result of feedback from the FSA's visit. The FSA also took into account improvements made by the firms including writing to all affected customers and paying compensation where appropriate, reviewing sales processes and taking steps to develop their sales staff. The firms fully co-operated with the FSA’s investigation.