Egg fined £721,000 for mis-selling PPI
Egg is the latest financial services company to be fined for mis-selling payment protection insurance (PPI).
The credit card provider sold the insurance via incoming customer services calls, or when its representatives made sales call to new customers.
In a review of cases covering the period January 2005 to December 2007, the Financial Services Authority (FSA) found failings in approximately 40% of sales.
Among its misdemeanours, Egg directed sales staff to use techniques to alter a customer’s decision if they said they did not want PPI.
These included over-emphasising the positive features of the PPI and telling the customer they could take out PPI for a free period and then cancel it they did not want to continue.
In some cases PPI was applied to a credit card without the customer’s consent.
Egg has set up a dedicated telephone line to deal with customer queries arising out of the FSA’s investigations and says it will pay compensation where appropriate.
The company has sold over 106,000 credit card PPI policies at an average cost of £156 and the FSA calculates that this could cost the lender £1.67 million for every 10% of customers who receive a refund.
The regulator’s director of enforcement, Margaret Cole, reminds firms that they must ensure that customers are treated fairly when selling PPI, adding that if a customer does not want PPI, they should not be pressured into taking it.
A £721,000 fine has been handed down to Egg, discounted from £1.03 million for early settlement of the investigation.
Category: Financial Services Authority News, Health Insurance News, Insurance News
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