The Financial Services Authority fined HFC Bank for being in breach of rules governing the sale of loan insurance products.
London (loans-bazaar) 22 January, 2008: The Financial Services Authority has imposed a fine of £1.085 million on HFC Bank, a part of banking giant HSBC, for putting its customers at an unacceptable risk of being sold payment protection insurance (PPI) when it was not suitable for them.
The fine was imposed by the Financial Services Authority for not following the proper safeguards ensuring the interest of consumers. The financial watchdog said that from January 2005 to May 2007, the HFC's procedures did not require advisers in its network to gather enough information about customers and consider whether payment protection insurance was suitable for them.
HFC sells personal loans and second mortgages to the consumers. It was visited last summer by FSA officials and found to be in breach of rules governing the sale of insurance products.
PPI has been the subject of regulatory scrutiny for months, as the financial watchdogs fret that Britons are being sold unsuitable cover at excessively high prices. Consumers take PPI to cover the risk of non-repayments in case of illness, unemployment, accident and permanent disability to work. PPI is often taken by the consumers relying on secured loans and mortgages.
Being a statutory body, the FSA aims to promote efficient, orderly and fair markets to help consumers achieve a fair deal.
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