Archive for October, 2008
Fsa Disappointed With Banks For Inadequate Insurance Sales
By admin | October 9, 2008
The Financial Services Authority (FSA) has enforced a seven million pound penalty on Alliance & Leicester after it observed that it had not given its loan consumers sufficient guidance on whether to take out payment protection insurance (PPI) on the product.
According to a research, it has been revealed that into the firms practice, the FSA found that between January 2005 and December 2007, the bank sold around 210,000 PPI arrangements on its personal loan products, with the average policyholder spending 1,265 pounds on the product.
It has been revealed that FSA is under pressure with the unsatisfied performance of the banks on insurance sales. FSA wants that the staff should provide the necessary information about PPI products on to personal loans to the consumers who are interested in applying for this cover.
It was stated that to supply insufficient information about the prices of the loan insurance services, as well as looking for ways to impel the products on to loans consumers without bearing in mind whether the insurance was suitable. Furthermore, the FSA ruled that Alliance & Leicester had trained its sale staff to push the PPI products on to personal loans customers who want to know about the requirement of opting for this cover.
Commenting on the ruling, Margaret Cole, FSA director of enforcement, said: “The failure of the Alliance & Leicester is the most grave we have observed. This is shown in the record PPI fine. It is very disappointing that after three years of regulation we are still facing severe troubles in PPI sales.”
He added that banks must change their performance where it is essential and if they are unable to sell this product in an adequate way, make sure that customers are treated fairly, they should not be selling it at all.
Following the declaration, Alliance & Leicester said in a statement that it would contact customers who were sold a PPI product with a personal loan during the investigated period and invite them to ask any query as to the way that they were treated. It revealed that if the bank was found to have acted wrongly, corrective action will be hunted.
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