mis-selling in motor retail sector
Five car dealers have been punished for failings in their
payment protection insurance (PPI) sales processes – the first
financial penalties imposed on companies from the motor retail
sector.
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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.
Previously, the FSA imposed public censures – but not fines – on
Eastern
Western Motor Group and Cathedral
Motor Company for failings in their PPI sales processes.
Among the shortcomings identified by the FSA were 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”,
along with a failure to monitor the quality of advice given by
sales staff to customers, and to ensure 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, said: “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.”
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 investigation, 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.
FSA conference
Motor retailers who wish to avoid a similar fate 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
here.
