14,400 customers at risk of mis-sold PPI from Loans.co.uk

The Financial Services Authority (FSA) which last month fined broker Loans.co.uk (LCUK) nearly half a million pounds found that the company did not have in place the systems and controls needed to minimise the risk of unsuitable sales for Payment Protection Insurance (PPI).

The FSA said that LCUK failed to treat its customers fairly when selling (PPI) and, it noted: "LCUK's breaches were particularly serious as the failings exposed approximately 14,400 customers to the risk of the sale of PPI which was unsuitable for their needs".

The PPI was sold over the telephone on an advised basis by LCUK, but the company, says the FSA report, failed to gather and record the information as to why the recommendations made to a customer were suitable.

Many customers felt that they did not receive enough information at the time the policy was recommended to them and therefore were not confident that the product was right for them.

The FSA are now treating PPI as a high area of priority due to the potential number of mis-sold policies.
In an interview with the Telegraph newspaper on November 6, Margaret Cole, from the FSA said that “PPI can provide valuable protection against changes in personal circumstances, but customers should come away from the sale having been given the best possible information to understand that the PPI is optional, what the policy will and will not cover and how much it costs.”

She encouraged customers to ensure that they fully understand what they are being offered PPI so that they can then make an informed decision as to whether it is right for them.

Simon Burgess, a staunch campaigner for transparent payment protection insurance policies and MD of BritishInsurance.com says that PPI is a valuable product and it is good to see the worst practices which are dragging the whole market down being singled out and punished.

Referring to LCUK he added “The level of fine involved means that firms simply cannot afford to ignore their responsibilities any more.”