[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Tuesday, 30 January 2007, 12:39 GMT
GE bank fined for sales breaches
Man entering doors at FSA headquarters
The FSA is carrying out a drive to improve PPI standards
GE Capital Bank, which is behind many High Street store cards, has been fined 610,000 ($1.2m) for payment protection insurance (PPI) sales breaches.

The Financial Services Authority (FSA) said the General Electric UK subsidiary failed to adequately control insurance sales and to treat customers fairly.

PPI is a form of insurance that covers people in case they cannot pay loans as a result of illness or unemployment.

The fine is the biggest imposed by the FSA over PPI selling so far.

We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly
SA director of enforcement Margaret Cole

The PPI industry is worth an estimated 5.5bn a year.

Watchdogs have been carrying out a widespread investigation into the industry, and earlier this month the BBC learned that 10 banks and lenders would face fines following the probe.

Review

In a statement, the FSA said it had acted as GE Capital Bank had not reviewed its sales procedures, despite widespread evidence which emerged in 2005 that it was failing to meet recommended sales practices.

Failings pointed out by the FSA included:

  • Not ensuring that customers had adequate information before signing up for a policy
  • Failure to make sure staff were trained properly
  • Not monitoring or managing information properly
  • Failing to contact customers that the bank found had been sold PPIs erroneously in an effort to remedy the situation

The bank has now agreed to take action to resolve the problems.

GE Capital Bank provides many of the store cards that people are offered in High Street shops. About 300,000 shop staff sell insurance for the cards on behalf of the company.

According to the FSA, more than 850,000 policies which included PPI were sold by GE Capital in 2005.

"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," FSA director of enforcement Margaret Cole said.

"Our focus on Payment Protection Insurance will remain very high this year. We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly."


SEE ALSO
Big fines loom on debt insurance
22 Jan 07 |  Business
Lenders face debt insurance fines
22 Jan 07 |  Business
New FSA probe into debt insurance
11 Jan 07 |  Business
Broker fined for PPI mis-selling
26 Oct 06 |  Business
Debt insurance 'fails consumers'
19 Oct 06 |  Business
The UK's 5bn 'protection racket'
07 Apr 06 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites




FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific