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Friday, October 27, 2006

FSA Fines Credit Broker

The Financial Services Authority (FSA) has fined LOANS.CO.UK, a licensed credit broker, £450K for mis-selling Payment Protection Insurance (PPI).

Approximately 14,400 customers were sold policies that they may not have needed.

Last week the Office of Fair Trading (OFT) referred the PPI industry to the Competition Commission. The conclusion of a five month investigation by the OFT was that the sale of PPI policies offered a "poor deal and often less protection than [consumers] think".

PPI is worth around £5BN a year, so it should come as little surprise to learn that some companies sell these rather dubious products in an "aggressive" manner.

In theory the insurance is meant to provide people with protection, if they fall ill or lose their jobs. The FSA was critical of the way that Loans.co.uk had been selling, usually over the telephone. It said that customers were not given enough information at the point of sale to make an informed choice.

One would have thought that the financial services industry had learned its lesson from the endowment mortgage scandal of the 80's and 90's. Unfortunately not, despite its reputation being in tatters, it seems that the financial services industry is determined to make money no matter what the cost to the poor saps that it dupes and its own reputation.

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