LV= has been fined more than £840,000 for falling foul of the Financial Services Authority (FSA) rules when it comes to the sale of payment protection insurance (PPI).
The news comes just a month after the Competition Commission warned banks and other lenders that they may face compensation claims and bans on selling PPI.
According to the commission, as many as 14 million customers have been mis-sold payment protection insurance
in some way.
As a result, the FSA has cracked down on Liverpool Victoria and slammed the lender for "failings in relation to PPI offered to customers who telephoned LVBS seeking unsecured personal loan
s between 14 January 2005 and 8 August 2007."
According to the FSA, such customers were subjected to LVBS automatically adding the cost of PPI onto their loan quote without asking or even being told.
The lender has also been criticised for failing to provide adequate information about the features, exclusions and limits of the payment protection insurance
offered or added to a loan.
Director of enforcement at the FSA, Margaret Cole, said: "When customers phone for a quote, it is totally unacceptable for firms to add on the cost of insurance which the customer has not asked for. Many customers make their decisions when speaking to sales staff. If those conversations are unclear or misleading it will be no defence for firms to say that full details were included in the paperwork which customers received later.
"The LVBS process was flawed in its design. The firm has stopped all sales of PPI and is now proposing a comprehensive programme to contact its customers and pay them compensation where appropriate."
In response to the FSA
announcement, the lender said: "LVBS apologises to customers for any past shortcomings in the PPI sales process. It has proactively launched an appropriate customer redress programme and will be writing to all customers affected.
"The FSA acknowledges that the redress programme, which includes automatically refunding interest charged on PPI premiums, is 'substantial and comprehensive'."
However, LVBS claims that its market share of all PPI sales was less than 0.5 per cent and of those sold, 75 per cent were prior to July 2006, claiming that the issue of automatically adding PPI to loan products had been rectified by then and it had exited the personal loan market completely in 2007.
If you think you have been mis-sold payment protection insurance, you can make a complaint and get compensation. Just click on the link Payment Protection Insurance Complaint »
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