A failure to treat customers fairly when selling payment
protection insurance has landed Redcats a £270,000 fine from
the Financial Services Authority. The regulator found that
Redcats did not have “adequate systems and controls in
place to minimise the risk of unsuitable sales”. The FSA
said there were also weaknesses in the way Redcats operated and
maintained its “compliance systems, training and competence
arrangements and sales processes”. This meant that over an
18 month period, some 160,100 customers were sold PPI which might
not have been suitable for their individual needs.
FSA director for enforcement, Margaret Cole said, “We have
highlighted payment protection insurance as an FSA priority due
to the potential risks to consumers. As a result of its systems
and control failures Redcats exposed its customers to an
unacceptable level of risk. Firms offering PPI must operate in a
way that treats their customers fairly and meets regulatory
requirements.”
In determining the level of the financial penalty, the FSA took
into account a number of measures taken by Redcats which mitigate
the seriousness of its failings including engaging an independent
consultant to assist in implementing changes to its compliance
arrangements, committing to a remedial action plan and
voluntarily suspending new PPI sales while the plan was put in
place. By agreeing to settle at an early stage of the
investigation Redcats qualified for a 30 per cent discount under
the FSA’s executive settlement procedures – without the discount
the fine would have been £386,000.
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