The UK's Financial Services Authority has fined loan broker Loans.co.uk Limited GBP455,000 for failing to make sure that adequate process were in place to ensure the suitability of its payment protection insurance recommendations and for failing to treat its customers fairly.
The regulator found that Loans.co.uk Limited (LCUK) did not have appropriate systems and controls to minimize the risk of unsuitable sales of payment protection insurance (PPI), a type of insurance that has come under increasing scrutiny of late.
At LCUK, PPI was sold on an advised basis over the telephone. The Financial Services Authority (FSA) investigation found that the firm failed to gather and record information to show that the policy recommendations it made were suitable for customers.
The FSA discovered that customers did not receive enough information at the point of recommendation to make an informed decision about the PPI policy being offered. Therefore, customers could not be sure if LCUK’s recommendation was the right option for them, the regulator has concluded.
The FSA said that LCUK’s breaches were particularly serious as the failings exposed approximately 14,400 customers to the risk of the sale of PPI that was unsuitable for their needs.
The regulator also found that LCUK failed to have appropriate compliance monitoring procedures in place to identify failings in the sales process. LCUK did not provide guidance to staff on how to identify a complaint or adequately communicate its complaints handling procedure to them.
By agreeing to settle at an early stage of the FSA investigation, LCUK qualified for a 30% discount under the FSA’s executive settlement scheme. Without the discount, the financial penalty imposed would have been GBP650,000.