The UK Financial Services Authority has continued its crackdown on payment protection insurance providers by fining GE Capital Bank GBP610,000 for failing to have adequate systems and controls for selling insurance and for failing to treat its customers fairly.
GE Capital Bank (GECB) is primarily engaged in providing credit finance through store cards on behalf of retailers. The payment insurance is usually offered to customers at the till when they are applying for a store card and, according to the Financial Services Authority (FSA), over 850,000 policies, including payment protection insurance (PPI), were sold on the bank’s behalf in 2005 alone.
FSA director of enforcement Margaret Cole commented, however: Millions of people take out store cards every year. They need to know that PPI is almost always optional and should consider whether they need it before signing up.
The FSA said that it had found widespread non-compliant selling practices in GECB processes, which the bank had since failed to amend. It accused GECB of failing to revise its sale procedures so that all consumers were adequately informed about the PPI product before deciding to buy it, and of failing to implement any procedure to contact customers to remedy previous non-compliant sales.
The FSA added that GECB is now contacting affected customers and will pay compensation where appropriate, although it conceded that, in this particular case, the financial impact on most customers was likely to have been modest.
According to This is Money, the branded store cards include those from Debenhams, Mothercare, Miss Selfridge, TopShop, and Asda, among others. It added that the compensation claims would be based on the information given to customers by as many as 300,000 in-store retail assistants, which accounts for 95% of all GECB’s PPI sales.
The FSA concluded that GECB had qualified for a 30% discount, without which the fine would have been GBP 870,000, because it had agreed to settle at an early stage.