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The FSA has fined Swinton Group Ltd £770,000 for serious failings in their advised sales of single premium payment protection insurance (PPI).
The high street insurance broker has also agreed to contact over 350,000 customers who paid for the PPI and offer a full refund.
Between December 2006 and March 2008 the FSA found that the firm’s PPI sales process was flawed. The regulator found that problems arose as a result of an ‘assumptive’ selling technique in which PPI was automatically included in insurance quotes without first establishing that the customer had any real demand or need for the PPI cover. This resulted in unacceptable levels of non-compliant sales.
In addition, Swinton did not make it sufficiently clear that PPI was optional and did not properly disclose the cost of PPI at the point of sale. Firstly, the cost was bundled within the initial insurance quote and secondly, Swinton failed to disclose before the sale completed that the policy only cost £1.21 with the remainder of the £15/£20 charged being a fee taken by Swinton.
Swinton’s PPI customers will now be able to get a full refund. Swinton will also pro-actively review previously rejected claims and pay compensation where appropriate. Swinton accrued approximately £7.8 million from its PPI sales.
By agreeing to settle at an early stage of the investigation Swinton qualified for a 30% reduction on the full fine were it not for this discount, the FSA would have imposed a financial penalty of £1.1 million.
Swinton exited the PPI market in March 2008 following a request from the FSA when these failings came to light.
Margaret Cole, FSA director of retail enforcement and financial crime, said: “These were deliberate breaches. Swinton was fully aware it should establish a customer’s need for PPI before recommending it