Capital One Bank has been slapped with a GBP175,000 fine by the UK Financial Services Authority for failing to implement adequate systems and controls when selling payment protection insurance, as well as for failing to treat its customers fairly.
The investigation, focused primarily on credit card payment protection insurance (PPI) sales that occurred between January 5, 2005 and April 2006, discovered that 50,000 Capital One customers had failed to receive important information about their policy, including all exclusions, but did receive a policy summary.
As part of the remedial process, Capital One will ensure that those customers who did not receive the policy documents have the option to be compensated. The cost of this is estimated to be around GBP3 million.
In addition, the investigation also found that its compliance monitoring of telephone sales of PPI was not effective enough; two out of four script options used by its sales associates did not ask the customer for consent to receive only limited information over the telephone, nor did the scripts ensure adequate disclosure in enough cases of policy features, benefits and policy exclusions and limitations.
Capital One has agreed to settle at an early stage and therefore qualifies for a 30% discount. Prior to the discount, Capital One would have been faced with a financial penalty amounting to GBP250,000.