Joining a growing list of errant PPI product suppliers LVBS has been fined £840,000 ($1.68 million) by the FSA for contraventions that occurred between 14 January 2005 and 8 August 2007.
The FSA explained that when customers phoned LVBS to apply for a personal loan, LVBS added the cost of PPI to the quotation without the customer asking for it. If customers realised they did not have to buy the cover and objected to it, LVBS put pressure on them to take the PPI.
Other poor selling practices uncovered by the FSA included LVBS’s failure to inform customers that the cost of the single premium PPI was added to the loan and that as a result customers paid additional interest on the PPI premium for the life of the loan.
Overall, of 97 sales calls reviewed by the FSA over 60 percent were found to be non-compliant with regulations.
During the period under review LVBS sold about 14,500 PPI policies on a non-advised basis at an estimated average cost of £1,600 including interest, according to the FSA.
The FSA noted LVBS has stopped sales of PPI products and has agreed to undertake a comprehensive remedial programme. As part of the programme the interest paid on PPI premiums will be refunded automatically, without the customers having to write to LVBS and make a claim. In addition LVBS will be writing to its PPI customers asking them to review the terms of their PPI policy and offering to pay full redress where appropriate.
LVBS also agreed to extend the scope of its redress proposals to include a review of all PPI offered via telephone, the internet or post between 14 January 2005 and 31 January 2008.
The FSA has previously fined seven companies for poor PPI selling practices. The largest fine, £1.085 million, was handed down to HFC Bank, a unit of HSBC, in January 2008.
The fine handed down to LVBS is the second largest and, noted the FSA was “significantly reduced” in recognition of the remedial action being taken by LVBS.