Capital One has been fined £175,000 by the Financial Services Authority (FSA) for failing to put in place adequate systems and controls when selling payment protection insurance (PPI).
The FSA found that, between January 2005 and April 2006, 50,000 of Capital One’s customers were not provided with important information regarding their policy. As a result, argues the FSA, these customers were unable to know exactly what they were covered for, or even whether or not the policy would suit their needs and requirements.
The FSA investigation focused only on credit card PPI sales, of which Capital One sold approximately 335,000 UK policies during 2005.
Director of the FSA, Margaret Cole, has said: “We are determined to see much better practice in PPI. It is unacceptable for people to be put at risk of buying unsuitable protection insurance through not being given the right information at the right time”
In response to the investigation, Capital One has launched a £3 million remedial programme to address the systems and control issues which caused the situation to occur. And by settling early, Capital One has qualified for the 30% discount allowed under the FSA’s executive settlement procedures, cutting the total fine of £250,000 by £75,000.
Sanjiv Yajnik, Capital One’s chief executive, said: “We consistently review our policies and practices and had made a number of significant improvements prior to the FSA’s investigation. The FSA has recognised that Capital One co-operated fully throughout the investigation."
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