Swinton, the high street insurance broker, has been fined £770,000 today and ordered to offer refunds to over 350,000 customers after the City regulator found “serious failings” in its sale of payment protection insurance (PPI).

The company has agreed to contact the holders of more than 480,000 motor and home insurance policies bought between December 2006 and March 2008 to offer them a refund of the premium paid for the PPI, sold to cover monthly direct debit payments if the borrower becomes unable to pay because of accident, sickness or unemployment.

The Financial Services Authority (FSA) said it was concerned that PPI was automatically included in Swinton's motor and home quotes without checking whether there was any need for the cover.

Swinton failed to make the optional nature of PPI clear enough and did not properly reveal the cost when selling the policy.

The broker pulled out of the PPI market in March 2008 at the request of the FSA, after these failings came to light.

Margaret Cole, FSA director of retail enforcement, said: “These were deliberate breaches. Swinton was fully aware it should establish a customer’s need for PPI before recommending it.

“Swinton’s PPI sales fell a long way short of our requirements and the firm clearly failed to treat its customers fairly. This penalty, the remedial action, and Swinton's departure from the PPI market serve as a shot across the industry's bow to remind it to play fair, or not play at all."

The FSA said that Swinton would have been fined £1.1 million if it had not agreed to settle at an early stage of the investigation.

A spokesman for Swinton said: "Swinton takes the matter very seriously and will be contacting all customers concerned. The company apologises to any customer affected, and has set up a dedicated unit to deal with the PPI cases."

 

Source: The Times