The UK Financial Services Authority has imposed a public censure on auto group Cathedral Motor Company for its failures relating to its sale of payment protection insurance as part of its vehicle finance agreements.
<p>Primarily engaged in the sale of new and used cars, Cathedral is a franchised car dealer operating through four branches in the Midlands trading as Arbury. It also sells payment protection insurance (PPI) on an advised basis to cover vehicle finance agreements. <br /><br />The regulatory body revealed that Cathedral failed to execute its regulated business responsibly and effectively. More specifically, the investigation discovered that there was limited or no monitoring of its staff and, consequently, the company could not determine whether its sales staff met the needs of the customers. <br /><br />Furthermore, Cathedral did not sufficiently distribute compliance responsibilities among its senior management and did not ensure appropriate training of its staff, the FSA discovered. <br /><br />The group was also found to have failed to provide customers with certain key documents before the conclusion of the sale, creating a risk of consumer detriment. <br /><br />In determining the appropriate disciplinary measure, the FSA took into account a number of mitigating factors. The number of PPI policies sold by Cathedral was low – 257 in 16 months – and after the problems were identified during an FSA thematic visit in May 2006, Cathedral voluntarily suspended PPI sales while it satisfied itself that future sales would be compliant. Cathedral has taken steps to improve its systems and controls, record-keeping and training and monitoring arrangements and has also agreed to carry out an appropriate customer contact exercise. <br /><br />This public censure is the latest case of FSA work looking into the sale of PPI. By the end of June 2007, the FSA will have visited over 200 PPI firms over a two-year period.</p>