Largest PPI fine to date imposed by FSA

The Financial Services Authority has dished out its biggest fine to date over breaches of PPI, with a whopping £1 million fine imposed on a division of one of the UK’s big banks. The fine has been issued to HFC Bank, which trades as Beneficial Finance, and is part of the HSBC Group.

PPI is a type of insurance cover that is sold with finance such as loans and credit cards, and is designed to cover repayments for a specified period if the policyholder is sick, injured, or made redundant, and therefore cannot make repayments. The cover gives the policyholder time to get back on their feet.

However, there has been much controversy over the sales of PPI over the past couple of years, with accusations that many lenders were mis-selling these policies or forcing them onto customers without their knowledge in some cases. This resulted in financial regulators stepping in and introducing regulations with regards to PPI sales.

The FSA stated that there were a number of shortcoming highlighted with HFC, and the hefty fine proved that the FSA was serious about sorting out the PPI issue. One FSA spokesperson stated: "HFC’s failings put its customers at risk of buying unsuitable protection insurance and the financial impact on them of unsuitable advice was likely to be significant."