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Alliance & Leicester Plc, the U.K. lender (taken over by Banco Santander), paid a record 7 million-pound fine for improperly selling payment-protection insurance. Alliance & Leicester failed to tell customers the real cost of PPI insurance, which is sold to cover loan payments in case of illness or unemployment, the Financial Services Authority said in a statement. It’s the FSA’s biggest fine over PPI sales.
The Competition Commission found that banks and retailers overcharge by as much as £1.4 billion a year because consumers aren’t advised they can choose other providers. Alliance & Leicester sold 210,000 PPI policies between January 2005 and December 2007 at an average cost of 1,265 pounds, according to the FSA. The company didn’t explain during telephone sales that PPI was optional and pressured customers who questioned its inclusion with the loan, the FSA said.
Alliance & Leicester fined
