Money News: Loans.co.uk is fined £455,000 as City hit squad strikes again

The Financial Services Authority has fined credit broker Loans.co.uk £455,000 for failing to treat its customers fairly over the sale of payment protection insurance (PPI).

The company did not have sufficient controls in place to "minimise the risk of unsuitable sales", said the City regulator.

PPI is sold with loans, and is designed to pay out if the borrower is unable to make repayments because of accident, sickness or unemployment. But policies can be overpriced and mis-sold, often using high-pressure sales tactics, to people for whom they have little or no value - such as the self-employed.

Loans.co.uk, which sells PPI over the phone with loans, failed to gather and record information to show that the policy recommendations it had made were suitable, the FSA said.

And, it added, customers did not receive sufficient information at the point of recommendation to make an informed decision about the PPI policy on offer.

According to the watchdog, as many as 14,400 people were exposed to the risk of buying PPI that was unsuitable for their needs.

Loans.co.uk is the second company in as many months to be hit with a fine over PPI: last month, Regency Mortgage Corporation was fined £56,000 for "PPI failings".

Since Loans.co.uk agreed to settle its case early, the FSA reduced the penalty by around a third. The company says it has had new practices in place for the past six months, and is contacting customers to offer redress where appropriate.

The £5.5bn PPI market is to be the subject of a full investigation by the Competition Commission after a report by the Office of Fair Trading found it was "failing consumers".

Advertising: Lloyds TSB rapped over mailshot

A "handwritten" promotional leaflet from Lloyds TSB bank has come under fire from the Advertising Standards Authority for misleading the public.

The leaflet was designed to look like a folded hand-written note, and was stamped with the words "chosen by your neighbours". The ASA said recipients could have been misled into thinking the bank's home insurance had been recommended by someone they knew.

It also criticised a similar mailing that resembled post that had been redirected by a neighbour.

It said: "Redirect - I got a great deal on my home insurance with these guys. Just thought you might be interested." According to the ASA, it was not made clear that the leaflets were advertising material.

Lloyds TSB said it had chosen this marketing approach because it believed it was the UK's "number one" home insurance provider - and claimed this meant it was statistically most likely to be insuring the recipient's neighbour. All the leaflets were printed with the Lloyds TSB Insurance logo to make them "readily identifiable". But the bank issued an apology and said it had not intended to mislead people.

It told the ASA it had "no further plans to use the material in its current form".

Pensions: Earnings link 'will be too late' for millions

Hundreds of pensioners marched on Parliament last week to lobby for an increase in the basic state pension.

Members of the National Pensioners Convention (NPC) dressed up as "skeletons" on Wednesday to stress that half a million elderly people die every year, and to demand that the needs of the old are not ignored in the Government's reform of pensions.

Campaigners said up to three million pensioners would die without seeing any benefit from the Government's plans to restore the link between pensions and average earnings. The reform is not scheduled until 2012 at the earliest.

The NPC, which represents more than 1,000 pensioner groups, says this will be too late for many pensioners. It is calling on MPs to reinstate the link with immediate effect. It is also wants the state pension raised from £84.25 to £114 a week.

Joe Harris, general secretary of the NPC, said: "One in five older people live below the poverty line and millions more are being forced into hardship by fuel and council tax bills."

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