Swindon Fined for Breaching Payment Protection Insurance Sale Requirements

On Wednesday, October 28th, the Financial Services Authority ordered Swinton, one of the leading UK insurance brokers, to pay a fine of £770,000 and to offer refunds to thousands of its customers as the investigation carried out by the City watchdog found out that the insurance broker committed several failures when selling payment protection insurance (PPI). According to the statement of the FSA, Swinton failed to explain to its customers that the purchase of the payment protection insurance is optional and automatically included its cost in home or car insurance quote, failing to properly comment on the cost of the insurance policy. The FSA also found out that the firm managed to make as much as £7.8 million from its sales of payment protection insurance by charging customers a fee of £15-£20, whereas the actual cost of the policy did not exceed £1.21. Let us remind that the FSA findings were revealed in March 2008, and the insurance broker was ordered to pull out of the payment protection insurance market at that time. FSA specialists are determined that the breaches, in which Swinton was involved, were absolutely deliberate as the firm was fully aware of its rights and responsibilities, including the need to determine whether the customer needed a PPI or not prior to selling it. Swindon, thus, failed to meet the FSA requirements of treating its customers fairly, which resulted not only in a significant fine but also in Swindon’s departure from the PPI sector. In addition to the above-mentioned measures, the FSA claimed that the insurance broker might face an even larger fine of £1.1 million should it fail to settle at the early stage of the investigation. Swinton spokesman, however, said that the firm does take the matter seriously and will definitely contact approximately 480,000 holders of motor and home insurance policies sold by Swindon earlier to offer them a refund of the PPI premium.