Motor dealers fined over insurance
Updated on 21 August 2008
Five motor dealers have been fined collectively more than £175,000 for serious breaches over the way they sold controversial payment protection insurance (PPI).
The Financial Services Authority (FSA) said the failings by the dealers had exposed 2,175 customers to the risk of being sold unsuitable policies.
The regulator has taken action against Chesterfield-based GK Group, George White Motors, which has a head office in Swindon, Ringways Garages in Leeds and Doncaster and Lanarkshire-based Park's of Hamilton, which all sold PPI alongside loans for cars or motorbikes.
It said the firms failed to gather enough information about customers, such as pre-existing medical conditions, current insurance cover and benefits they would receive from their employer, when selling the insurance.
As a result people could have been sold PPI that was unsuitable for them, either because they would not have been able to claim on their policy or because it duplicated cover they already had.
It added that the firms also failed to monitor the quality of advice given by sales staff and to ensure that appropriate sales processes were followed.
PPI, which covers debt repayments if the holder is unable to work or loses their job, has come in for heavy criticism in recent years, with consumer groups claiming the cover is expensive and often sold to people who would never be able to claim on it.
The Competition Commission issued a damning report on the PPI market earlier this year in which it said consumers were being overcharged for the cover by £1.4 billion a year due to a lack of competition in the market.
It warned that it was considering banning the sale of PPI alongside mortgages, loans and credit cards, adding that it may also introduce a price cap as a temporary measure to reduce the cost of the policies.
The fines issued by the FSA were: GK Group £51,100, George White Motors £28,000, Park's of Hamilton £61,600, and £35,000 for Ringways Garages together.
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