UK lenders could face hefty fines over PPI sales

Over recent months PPI, or payment protection insurance, has been at the centre of controversy in the UK, with many MPs, and even the Financial Services Authority and the Office of Fair Trading expressing concerns over just how appropriate these policies are to the people that they are being sold to. And the BBC has now reported that around ten banks and lenders are to face hefty fines in relation to mis-selling PPI to consumers who take out finance with then.

According to reports the lenders could be facing fines of around a million pounds each, with the fines to be implemented by the Financial Services Authority. Payment protection insurance has been dubbed a protection racket by some consumer groups, and according to reports many of the lenders being fined are household names in the world of banking and finance.

Other experts have added that although a one million pound fine may not seem much to a big name lender, they could end up facing further financial implications due to the possibility of customers taking legal action over being mis-sold payment protection insurance. This, said one BBC editor, could make the financial cost to many of these lenders far more significant.

According to the Office of Fair Trading, which conducted a lengthy investigation into payment protection insurance last year, this type of protection often offered consumers a raw deal, and gave them far less in the way of protection than they thought. According to the Office of Fair Trading PPI plans all too often failed the consumer, and lenders all too often gave consumers the hard sell on policies that weren’t even all that suitable for them.

It is thought that once the news of the fines becomes mainstream many borrowers may look into taking court action after being sold these PPI plans.

Alisdair Milton
15th January 2007

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