The Financial Services Authority (FSA) has fined the internet Bank Egg £172,000 for serious failings in the way it has sold Payment Protection Insurance (PPI) to its customers who use their Credit cards. Between Jan 205 and Dec 2007 the FSA found failings in over 40% of slaes of PPI made over the phone. During this period Egg sales staff sold more than 106,000 policies at an estmated cost of £156 each.
These policies for PPI which were sold are designed to protect monthly payments if the policy holder is made redundant or unable to work through sickness or accident. These polices have been criticised as being overly expensive and unsuitable due to the fact they rarely pay out in the event of a claim. These policies are extremely profitable for the companies selling them as it is calculated that only 4% of people ever actually get any benefit form these policies.
Egg was only authrised to sell these policies on a non advised basis meaning that sales staff were only allowed to give informaton about the products not actually reccomend them. During the FSA’s investigation it came to light that these sales staff were instructed to use hard sell tactics to anyone who did not choose to buy the cover.
These included over-emphasising the benefits of the cover or telling customers they could take it out for free for a limited period and then cancel. In some cases, Egg applied the cover to a customer’s credit card even when they had not agreed to buy it.
The FSA’s director of enforcement, Margaret Cole, said Egg had used "inappropriate sales techniques" to try to persuade customers to buy PPI.
"All firms must ensure that customers are treated fairly when selling PPI and if a customer does not want PPI, they should not be pressured into taking it," she said. "It is unacceptable that Egg did not identify the problems with its sales processes despite a series of high profile FSA communications on PPI, including earlier fines on other firms."
Egg have confrimed that if they have to rfund all their customers who were wrongly sold PPI it could cost them over £10 million. To make a claim simply fill in the online form and you will know within 60 seconds if you have a valid claim
A statement from the internet bank said: "We are taking the matter very seriously and would like to apologise to any customers who have been affected.
Egg is the 20th company to face action by the FSA over PPI sales, and its penalty pales in comparison to the £7 million handed out to Alliance & Leicester in October.
If you have been sold PPI then you may well be in line for a full refund. This includes all PPI taken out on Loans, Credit Cards, car Finace and Catalgue purchases. Take a look at the the criteria to see if you qualify.
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