Egg has been fined £721,000 for pressurising 40% of its credit card customers to take out payment protection insurance (PPI) over the phone.
The Financial Services Authority (FSA) says an investigation in Egg’s sale techniques found “serious failings” in the way it sold PPI alongside credit cards. Customer who took out this controversial type of payment insurance between January 2005 and December 2007 could now be due a refund, and Egg is expected to pay £1.67 million for every 10% of customers who qualify for a refund.
Egg’s sales staff were found to have exaggerated the benefits of PPI in around 40% of telephone sales. They also told people they could take out PPI for a free trial and cancel it at a later date.
Egg will now have to write to affected customers asking them to call a dedicated number if they have any concerns about the policy or the way it was sold. It will also issue compensation where appropriate.
Margaret Cole, director of enforcement at the FSA, says: “Egg used inappropriate sales techniques to try to persuade customers to buy PPI on their credit card even when they asserted they did not want the cover. Egg is likely to pay substantial compensation as a result of this exercise."
Egg says it has worked "constructively" with the FSA to resolve the issue, and has apologised to any customers who have been affected.
In a statement, the online bank said: "We will be contacting all customers impacted by this, giving them the opportunity to review whether the product was or is still suitable for them. A dedicated team of call centre staff will be ready to assist with customer enquiries on this issue."