The FSA found that A&L advisers failed to give customers full details of the cost of PPI in respect of policies sold between January 2005 and December 2007, did not take customers’ needs into proper consideration when selling the policies, did not make it clear enough that PPI was optional and, in addition, trained its staff to put pressure on customers who queried the inclusion of PPI in their loan quotations to purchase PPI.
A Final Notice issued by the FSA stated that A&L’s failings were breaches of the FSA’s Principles for Business. In particular, A&L failed to:
(1) take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems;
(2) pay due regard to the interests of its customers and treat them fairly;
(3) pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading; and
(4) take reasonable care to ensure the suitability of its advice.
The FSA’s Director of Enforcement, Margaret Cole, said the failings at A&L were “the most serious we have found.” She said this was reflected in the size of the fine, which is more than eight times higher than the fine levied on Liverpool Victoria Banking Services Limited in August (see previous blog here) and forty times higher than one imposed on five motor dealers in September (see previous blog here). The FSA said the level of the penalty was intended to act as a deterrent to other businesses.
A&L has accepted the fine and said it will write to all customers who purchase PPI in conjunction with an unsecured loan during the affected period and request them to review their policies. A&L also qualified for a 30% reduction by cooperating with the investigation and agreeing to settle at an early stage. Without this discount, the penalty would have been over £10 million.
The FSA recently noted that a higher level of regulatory intervention was needed with regard to the sale of PPI (see previous blog here).