From Bank Charges To PPI
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A part of the high street bank HSBC has been fined £1m for failings over payment protection insurance (PPI). The Financial Services Authority (FSA) said HFC Bank failed to ensure customers received suitable advice between January 2005 and May 2007.
PPI covers repayments on loans, mortgages and credit cards if the borrower is unable to make them because of loss of earnings as a result of accident, sickness, unemployment or death. But it has been widely criticised by consumer groups for being expensive and offering limited benefits to policyholders
HFC Bank is the UK arm of the giant US loan company Household International, which was bought by HSBC in March 2003. It offers secured and unsecured personal loans via a 136-strong branch network, and has 1.5 million customers, many of whom have a poor credit rating.
The FSA said the firm failed to have adequate systems and controls in place which put its customers at an “unacceptable risk” of being mis-sold PPI.
In response, the bank said it was “committed to ensuring that customers are only recommended products that are suitable for their demands and needs”.
“It is, therefore, disappointing that in certain respects our procedures have been found to fall below the standards expected by the FSA and which we set ourselves,” said head of communications Patrick Long.
The FSA’s director of enforcement Margaret Cole said, ‘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,’ she added.
The FSA is working closely with the Competition Commission, which is currently carrying out its own investigation of the £5bn market after a referral from the Office of Fair Trading (OFT). It acted in response to a so-called ‘super-complaint’ from Citizens Advice which argued that the PPI market seriously harmed the interests of consumers.
The Competition Commission is expected to publish provisional findings in May 2008 so if you have been miss-sold one of these schemes you still have some time to wait, although there is a possibility that you could receive some compensation if firms are found to have consistently broken the law.
