Swinton fined £770,000 by FSA for mis-selling

The FSA has fined Swinton £770,000 for 'serious failings' in sales of single premium payment protection insurance (PPI).

Swinton has apologised to its customers and agreed to contact over 350,000 customers who paid for the PPI, offering a full refund. The high street broker said it 'acted in good faith'.

FSA enforcement director Margaret Cole said the fine "serve as a shot across the industry’s bow to remind it to play fair, or not play at all.”

The FSA found that Swinton automatically included PPI in insurance quotes, without making it clear to the customer.

The high street broker also failed to tell customers about PPI costs, all between December 2006 and March 2008.

It resulted in a flood of complaints from customers and the FSA rapped Swinton on the knuckles for breaching compliance rules.

In response to the fine, Swinton said it believed most cusomters understood the product.

A spokesman said: "The company did not deliberately set out to breach FSA rules or to disadvantage customers and acted in good faith in the development of its sales process which it believed was reasonable and proportionate for the low cost of the product.

"The total cost of the product was disclosed to customers and was in line with prices charged by other providers in the market for similar products.

"Swinton believes that the vast majority of its customers understood that the product was optional when offered to them and in fact, less than 50% of its eligible customers purchased the product.

"Swinton would also point out that the company itself initially brought issues with its sale of PPI to the attention of the FSA."

Explaining the full details of the fine, the FSA said: "Firstly, the cost was bundled within the initial insurance quote and secondly, Swinton failed to disclose before the sale completed that the policy only cost £1.21 with the remainder of the £15/£20 charged being a fee taken by Swinton.

"Swinton’s PPI customers will now be able to get a full refund. Swinton will also pro-actively review previously rejected claims and pay compensation where appropriate. Swinton accrued approximately £7.8 million from its PPI sales."

Swinton exited the PPI market in March 2008 following a request from the FSA when these failings came to light.

Cole added: “These were deliberate breaches. Swinton was fully aware it should establish a customer’s need for PPI before recommending it, yet nearly half a million policies were sold to customers who didn’t necessarily require them.

“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 - along with our recent announcement outlining the FSA’s tougher measures for regulating PPI – serve as a shot across the industry’s bow to remind it to play fair, or not play at all.”