Missold Loan Insurance News Swinton To Refund Payment Protection Insurance Customers
29 October 2009 / by Rachael Stiles
Swinton is being fined and made to offer refunds to customers who took out payment protection insurance following serious failings in its sales process of single premium PPI, the Financial Services Authority has said.
Following intervention by the FSA, high street insurance broker Swinton has agreed to offer refunds to more than 480,000 of its PPI customers, and will pay a £770,000 fine.
The FSA’s investigation into the payment loan protection insurance industry – which has unearthed a plethora of mis-sold payment protection insurance cases – found that Swinton’s PPI sales process was “flawed” – it used assumptive selling techniques, the FSA said, by including PPI automatically in its insurance quotes without first establishing with the customer that they required or wanted such cover, resulting in what the FSA deems “unacceptable levels of non-compliant sales.”
The insurer failed to make it clear that PPI was optional and did not disclose the full cost of it at the point of sale, bundling the cost within the initial insurance quote, and also failed to mention to customers that the policy only cost £1.21, while the remainder of the charge – £15-£20 – was a fee.
Having accrued approximately £7.8million from sales of payment protection insurance, Swinton will now have to offer customers a full refund. It withdrew from the PPI market at the FSA’s request when these failings came to light last March.
Margaret Cole, FSA director of retail enforcement and financial crime, said: “These were deliberate breaches. Swinton was fully aware it should establish a customer’s need for PPI before recommending it, yet nearly half a million policies were sold to customers who didn’t necessarily require them.
“Swinton’s PPI sales fell a long way short of our requirements and the firm clearly failed to treat its customers fairly,” she said, adding that she hopes Swinton’s punishment, in addition to the tougher measures being introduced by the FSA in the PPI market, “serve as a shot across the industry’s bow to remind it to play fair, or not play at all.”
If Swinton had not agreed to settle at an early stage of the FSA’s investigation, thus qualifying for a reduction on its fine, it would have faced a higher penalty of £1.1million.
Commenting on the FSA’s announcement, Vera Cottrell, personal finance campaigner at consumer watchdog Which?, has said:
“This is a truly shocking case. As an insurance broker, Swinton is supposed to give tailored advice to its customers. Instead, it saddled thousands of people with unnecessary and unsuitable insurance.
“Customers should get an automatic refund. Too few people are likely to claim back £15 or £20, which would mean Swinton is getting let off lightly, especially given the fine imposed by the FSA is just a tenth of the revenue it generated from PPI sales.”
Ms Cottrell believes that the FSA should also take action against the senior management responsible for “this systematic breach of the rules.”
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