failings in their payment protection insurance (PPI) sales
processes – the first financial penalties imposed on companies from
the motor retail sector.
The Financial Services Authority (FSA) fined GK Group Ltd,
George White Motors Ltd, Ringways Garages (Leeds) Ltd, Ringways
Garages (Doncaster) Ltd and Park’s of Hamilton (Holdings) Ltd a
combined total of more than £175,000 for “shortcomings” in the sale
of PPI alongside car and motorbike loans.
The FSA had previously imposed public censures – but not
fines – on motor retailers Eastern Western Motor Group and
Cathedral Motor Company for failings in their PPI sales processes,
in December 2006 and February 2007 respectively.
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Among the shortcomings identified by the FSA in announcing
the new round of penalties was a failure to gather enough
information on customers on such topics as employer benefits,
pre-existing medical conditions and existing insurance cover,
“creating the unacceptable risk of unsuitable sales of PPI”, the
FSA said. Moreover, the quality of advice given by sales staff to
customers was not monitored, and the retailers failed to ensure
that staff followed “appropriate” sales procedures.
In addition, the FSA said that one of the firms “did not
adequately assess whether customers were eligible to claim for
benefits from the PPI policies they sold”, while another “did not
assess complaints properly”.
Margaret Cole, FSA director of enforcement, commented: “Motor
retailers that sell PPI have to meet the same standards as the rest
of the financial services industry.
“All firms selling PPI must treat their customers fairly,
including taking proper steps to make sure sales are suitable and
customers are eligible to claim on the policy – PPI remains a top
priority for the FSA in 2008 and beyond.”
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By GlobalData
The fines for individual dealerships were: £51,100 for GK
Group; £28,000 for George White Motors; £61,600 for Park’s of
Hamilton; and £35,000 together for Ringways Garages Leeds and
Doncaster. All the retailers benefited from a 30 per cent fine
reduction for settling at an early stage of the enquiry, and all
“fully co-operated” with the investigation, the FSA said.
The FSA reported that certain of the fined firms have stopped
selling PPI as a result of the investigation.
Association advice
The head of the National Franchised
Dealers’ Association (NFDA), Sue Robinson, said that FSA
accreditation is a must for all retailers selling insurance
products such as PPI. Robinson added: “The NFDA is working with the
FSA to ensure that the regulations are as effective as possible,
and that they benefit businesses and consumers alike.
“PPI is seen as a high-risk product by the FSA, so requirements for
businesses that offer it are more stringent than selling other
insurance products. This has led to a number of dealers stopping
PPI product sales, and concentrating on lower risk products, such
as warranties and GAP.”
She added that NFDA members in need of advice should contact the
association.
Meanwhile, motor retailers who wish to avoid FSA fines are
encouraged to attend the FSA’s Motor Retailer Roadshow, a free
event designed to teach firms how to comply fully with PPI sales
regulations.
It will take place on October 2 in Ilkley, Yorkshire. Full
details can be found on the FSA website, http://www.fsa.gov.uk/.
