A&L fined £7m for PPI mistakes

08/10/2008

Alliance & Leicester (A&L) has been hit by a £7 billion fine from the regulator, after an investigation found that customers could have been mis-sold payment protection insurance (PPI) by the firm.

The Financial Services Authority (FSA) said yesterday that the bank did not make it clear to customers that the cover was an optional extra, rather than a "default" purchase.

Therefore, many could have been saddled with paying premiums for insurance that they did not want.

PPI is sold alongside loans and credit cards - and generally helps to cover repayments in case the policyholder suffers a sudden life change, such as job loss.

Margaret Cole, the FSA's director of enforcement, said: "The failings at A&L are the most serious we have found. This is reflected in the record PPI fine. It is very disappointing that after three years of regulation we are still finding serious problems in PPI sales."

She added: "This case shows that we will continue to step up the action we take when firms do not sell PPI properly. Customers should be able to rely on impartial advice based on their individual needs and demands."

The FSA's investigation of A&L covered the period from January 2005 to December 2007.

Tags; Young Family Finances, Job loss, Credit Card Lifestyle,

Regional Debt Advice; Debt Advice Leicester,

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