Regulatory news

FSA dishes out record PPI fine

19 January 2008

The bank was fined just over £1 million after evidence revealed that the bank had failed to ensure that advice given to customers for PPI was suitable. The organisation was also fined for its failure to have adequate systems and controls in place.

As part of its review into the bank, the regulator found that HFC Bank had few practices in place to ensure that advisers explained why they recommended a policy to customers, and also failed to ensure that advisers gained relevant information about the borrower before recommending a product.

Announcing the regulator’s decision, Margaret Cole, director of enforcement at the FSA, commented: “We are determined to see much better practice in the PPI market. We announced in September that we would be imposing higher fines for serious failings in the retail market including against firms who fall short in relation to PPI.

"The fine against HFC – the biggest PPI fine to date and first since our September announcement – is evidence of our determination in this area.

"HFC’s failings put its customers at risk of buying unsuitable protection insurance and the financial impact on them of unsuitable advice was likely to be significant.”

Mark Roberts, head of financial regulation at the ifs School of Finance, said: “The FSA has repeatedly warned of the need to treat customers fairly and it should therefore come as no surprise when fines follow for those who fail to do so.

"Such fines are avoidable; organisations simply need to implement ‘Treating Customers Fairly’ strategies that will satisfy both regulatory and customer expectations.”

Try your luck in our latest quiz

Get the daily news delivered to your inbox
Find the latest industry jobs