The Financial Services Authority has fined HFC Bank, GBP1.085 million for failing to take reasonable care to ensure that the advice it gave customers to buy payment protection insurance was suitable, and for failing to have adequate systems and controls for the sale of PPI.
Previously, HFC’s procedures did not require advisers in its branch network to gather sufficient information about customers’ circumstances and take sufficient information into account when considering whether payment protection insurance (PPI) was suitable. HFC has also did not require advisers to explain fully why they recommended a particular policy or identify to customers any demands and needs which the policy would not meet. These and other failings meant that HFC put its customers at an unacceptable risk of being sold PPI when it was not suitable for them.
Following discussions with the FSA, HFC has agreed to implement changes to its sales processes and has committed to a robust remedial action plan, overseen by third party accountants, involving a program of customer contact and, if appropriate, steps to ensure that its customers are not disadvantaged. By agreeing to settle at an early stage HFC has qualified for a 30% discount under the FSA’s executive settlement procedures – without the discount the fine would have been GBP1.55 million.
Margaret Cole, FSA Director of Enforcement, said: We are determined to see much better practice in the PPI market. We announced in September that we would be imposing higher fines for serious failings in the retail market including against firms who fall short in relation to PPI. The fine against HFC – the biggest PPI fine to date and first since our September announcement – is evidence of our determination in this area. HFC’s failings put its customers at risk of buying unsuitable protection insurance and the financial impact on them of unsuitable advice was likely to be significant.