Swinton has responded to the Financial Services Authority’s announcement today of a fine of £770,000 in relation to sales of low cost Payment Protection Insurance policies.
Swinton takes the matter very seriously and will be contacting all customers concerned. The company apologises to any customer affected, and has set up a dedicated unit to deal with the PPI cases.
The company takes the view that the simple, low-cost PPI product it sold, (which cost £15 or £20), was different to that more commonly sold for many hundreds or even thousands of pounds alongside mortgages and loans in the rest of the financial services industry.
The company did not deliberately set out to breach FSA rules or to disadvantage customers and acted in good faith in the development of its sales process which it believed was reasonable and proportionate for the low cost of the product. The total cost of the product was disclosed to customers and was in line with prices charged by other providers in the market for similar products. Swinton believes that the vast majority of its customers understood that the product was optional when offered to them and in fact, less than 50% of its eligible customers purchased the product.
Swinton would also point out that the company itself initially brought issues with its sale of PPI to the attention of the FSA.
In 2007, Swinton’s own monitoring identified that it had sold PPI to customers who may not have been eligible. Swinton informed the FSA of this issue and the FSA subsequently launched its investigation into Swinton’s sales process. Swinton proactively undertook a customer redress plan at this time writing to around 40,000 potentially ineligible customers reminding them of their purchase and offering a refund. Very few customers responded. Swinton believes that while there may have been breaches of the FSA requirements most customers were content with their decision to buy the policy. The company ceased all sales of PPI in March 2008.
The FSA acknowledges that “Swinton has worked in an open and co-operative way with the FSA throughout the investigation”, that the company “pro-actively implemented a remedial action plan to provide redress” and that “the impact of any individual customer detriment from a non-compliant sale of such a product would have been low”.
