A subsidiary of HSBC has been fined over £1 million by the Financial Services Authority for the way it sold payment protection insurance to customers.
HFC Bank, which provides finance through retailers such as Currys and PC World as well as its branch network, has been part of HSBC since 2003. It has today been fined £1,085,000 by the financial regulator for selling controversial PPI policies to customers without making sure that the product was suitable for their needs.
The FSA says the bank put its customers at risk of mis-selling from January 2005 to May 2007. During this time, HFC sold protection insurance alongside 75% of its loans.
The fine is the first the FSA has issued since September when it warned it would crack down on PPI failings. It is also the largest PPI-related fine to date.
PPI is sold alongside credit and loans to cover repayments should the borrower be unable to work due to illness or unemployment. The way companies sell PPI has been the subject of an in-depth investigation by the Competition Commission amid fears that it is widely mis-sold and fails to properly protect customers.
Margaret Cole, director of enforcement at the FSA, says: “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."
HFC's has 136 branches in the UK and sells secured and unsecured loans as well as protection insurance.
It has now agreed to make changes to its sales processes.