LVBS fined over insurance flaws
August 3, 2008
Liverpool Victoria Banking Services (LVBS) has been handed a £840,000 fine for “serious failings” in the sale of Payment Protection Insurance (PPI).
LVBS added the PPI to quotes for personal loans without customers asking for it, the Financial Services Authority (FSA).
The interest on the PPI payments will be repaid to 14,500 customers who took out the insurance from 2005 to August 2007.
The fine handed to LVBS is the second largest to be given by the FSA for PPI sales. HFC Bank, part of HSBC, were fined £1m in January.
The watchdog said LVBS, which is a subsidiary of Liverpool Victoria Friendly Society, didn’t explain the cost of the PPI was added to the unsecured personal loan. They estimated that the average cost including interest was £1,600.
The FSA also found out that if customers did not have the cover and objected to having it, LVBS put pressure on customers to take it up. The FSA said that there was no defense in LVBS saying that details of the protection were explained in paperwork.
The FSA’s director of enforcement, Margaret Cole said “We have made it abundantly clear that firms must ensure their PPI sales processes are up to the required standards and must change their behaviour where necessary. The LVBS sales process was flawed in its design.”
LVBS has apologized and are writing to all customers which were affected. They no longer sell PPI.
Customers have been asked to review the terms of their PPI policy and interest paid on these policies would be automatically refunded. Full redress would be offered “where appropriate”.
PPI policies have been under attack over the past three years. Citizens Advice has described the sale of PPI as a “protection racket”.
See www.lv.com for more information.
Comments
Got something to say?
Advertisement