Car dealer rapped for wrongly sold policies
A DONCASTER car dealer has been heavily fined by financial watchdogs for selling unsuitable insurance policies to unwitting customers.
The Financial Services Authority (FSA) has imposed a penalty of 35,000 on Ringways Garages, who have Ford dealerships in York Road, Doncaster, and Leeds, for serious breaches relating to the sale of Payment Protection Insurance (PPI).
A total of 224 customers at the Doncaster showroom were exposed to the risk of being sold unsuitable PPI policies between 2005 and 2007.
Ringways netted a total of 47,500 in commission from the wrongly sold insurance but stopped as soon as the FSA became involved and received a discount on an initial fine of 50,000 because they had not acted in a deliberate or reckless manner.
Among the shortcomings identified by FSA investigators were that they failed to gather enough information about each customer, including pre-existing medical conditions, existing insurance cover and benefits received from employers, which created the unacceptable risk of unsuitable PPI sales.
They also failed to monitor the quality of the advice given by sales staff and to ensure appropriate sales processes were followed.
Margaret Cole, FSA director of enforcement, said: "Motor retailers that sell PPI have to meet the same standards as the rest of the financial services industry.
"All firms selling PPI must treat their customers fairly, including taking proper steps to make sure sales are suitable and customers are eligible to claim on the policy - PPI remains a top priority for the FSA in 2008 and beyond.
"Where we discover PPI failings, we will not hesitate to take tough action and impose higher penalties."
Ringways' breaches were viewed as particularly serious because sales staff failed to gather sufficient information about customers' personal circumstances and objectives when making sales to ensure its recommendations were suitable.
Ringways qualified for a 30 per cent reduction in penalty by settling at an early stage of the FSA's investigation.
It stopped selling PPI as a result of feedback from the FSA's visit and implemented a remedial action plan.
The FSA also took into account improvements made by the firms including writing to all affected customers and paying compensation where appropriate, reviewing sales processes and taking steps to develop their sales staff. Ringways were said to have fully co-operated with the FSA.
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