The banking arm of Liverpool Victoria friendly society has been fined £840,000 by the Financial Services Authority (FSA) over the way in which it sold payment protection insurance (PPI).
Chief among the failings exposed by the City regulator was the routine practice by Liverpool Victoria sales staff of automatically including PPI premiums in the repayment costs quoted to customers for personal loans. Many customers were unaware that PPI cover was optional.
The FSA also said that those customers who objected to PPI were subjected to high-pressure sales techniques by staff. The watchdog said there was no defence for Liverpool Victoria's actions.
"We have made it abundantly clear that firms must ensure their PPI sales processes are up to the required standards and must change their behaviour where necessary," said the FSA's director of enforcement, Margaret Cole. She added that the sales practices deployed by Liverpool Victoria were "flawed".
In response, the firm apologised for its "past shortcomings" and will be writing to 14,500 customers who may have been affected. It no longer sells PPI.
These policies cover the repayments on a loan if someone loses their income because of ill health or unemployment. But PPI is a highly controversial form of insurance. It is expensive and the policy small print can be full of exclusions – claims from the self-employed, for example – that make it unsuitable for some people.
Consumer groups such as Citizens Advice have described the sale of PPI as a "racket".
Over the past year, the FSA has fined a host of firms for mis-selling PPI. The penalty imposed on Liverpool Victoria is the second biggest handed out so far in this area by the City watchdog.Reuse content