Record £7m fine for Alliance & Leicester

Last Modified: 07 Oct 2008
Source: ITN

Alliance & Leicester has been fined a record £7 million for "serious failings" when selling payment protection insurance (PPI).

The Financial Services Authority (FSA) said telephone sales staff at the high street bank failed to make clear that the insurance for its loans was optional, and they were also trained to put pressure on customers when they queried the inclusion of PPI.

FSA enforcement director Margaret Cole said: "The failings at A&L (Alliance & Leicester) are the most serious we have found. This is reflected in the record PPI fine."

The failings occurred between 2005 and 2007, the FSA said, when A&L sold 210,000 policies at an average price of £1,265.

Meanwhile, the take-over of A&L by the Spanish bank Santander has been given the legal green light by the High Court.

A judge in London said the court will formally sanction a scheme of arrangement involving the cancellation of A&L's share capital and the issue to shareholders of one Santander share in return for every three A&L shares.

Banco Santander shares closed on the London Stock Exchange at 858.5p, and A&L at 285p on Monday.

Mr Justice Morgan heard that 44 per cent of A&L shareholders had voted on the scheme and 96.5 per cent of them are in favour.

After an unopposed 15-minute hearing, the judge said he would approve the reduction of capital and sanction the scheme of arrangement in two days time.

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