PPI fine for HFC Bank

16 January 2008

Part of HSBC group fined £1m for payment protection insurance (PPI) failings

The HFC Bank has been fined just over £1m, by the Financial Services Authority (FSA), for failing to ensure that customers received appropriate advice between January 2005 and May 2007.

To date, this is the biggest fine given by the FSA as a result of PPI failings.

In response, HFC said that it would formulate and put in place a “robust remedial action plan” and alter sales processes to ensure that customers were not disadvantaged.

PPI is a form of insurance offered to those taking out loans, mortgages and credit cards and would cover repayments in the event of loss of earnings due to an accident, sickness, unemployment or death.

Margaret Cole, director of enforcement at the FSA, said: “We announced in September that we would be imposing higher fines for serious failings in the retail market against firms who fall short in relation to PPI. The fine against HFC – the biggest fine to date and first since our September announcement – is evidence of our determination in this area.”

“HFC’s failings put its customers at risk of buying unsuitable protection insurance and the financial impact on them of unsuitable advice was likely to be significant,” she added.

HFC, who received a 30% discount on their £1,550,000 fine by co-operating, responded by saying that it was “committed to ensuring that customers are only recommended products that are suitable for their demands and needs”.

Head of communications, Patrick Long, said: “It is, therefore, disappointing that in certain respects our procedures have been found to fall below the standards expected by the FSA and which we set ourselves.”