The UK Financial Services Authority has fined home shopping company Redcats (Brands) Limited GBP270,000 for mis-selling payment protection insurance to its customers, having discovered that the company did not have adequate systems and controls in place to minimize the risk of unsuitable sales.
In addition, weaknesses were found in the company’s methods of operating and maintaining its compliance systems, training and competence arrangements and sales processes, the Financial Services Authority (FSA) said.
The UK regulator treated the breaches as a serious case due to the fact that, over an 18-month period, approximately 160,100 customers were sold payment protection insurance (PPI) that might not have been suitable for their individual needs.
A significant number of Redcats’ customers were discovered to have been mislead with advice on PPI policy features, terms, exclusions and limitations through its telephone sales channel, and therefore found to be failing to comply with regulatory requirements for advised sales.
By agreeing to settle at an early stage of the FSA investigation, Redcats qualified for a 30% discount, bringing the fine down from GBP386,000 to GBP270,000. The company has also been ordered to examine past sales and, if necessary, pay compensation.
The FSA has recently been on a mis-selling PPI spree, having fined two other firms for mis-practice, Regency and Loans.co.uk, as well as imposing a public censure on Eastern Western Motor Group.