Swinton to offer refunds on over 480,000 PPI policies following FSA intervention

[Amethyst]

Swinton Group ordered to refund PPI premiums to 500,000

The FSA have today ordered Swinton Group to refund PPI premiums of between £15 and £20 to customers. Single premium annual PPI was sold to customers who chose to pay for motor or home insurance in instalments by monthly direct debit payments. Subject to various conditions, limitations and exclusions, the PPI was designed to pay some of the instalments for the customer's home or motor insurance if the customer was made redundant or was unable to work through disability, injury or sickness. The FSA found that Swinton had only accepted and paid out on claims for 266 customers under the PPI policy despite over 500,000 being sold.

The FSA have said the sales process for PPI was flawed in its design. When customers asked to pay by instalments, Swinton added the cost of the single premium PPI to the initial quotation without the customer asking for it. The firm then automatically recommended the PPI to all customers who met a basic eligibility check, without checking whether the PPI was suitable for the individual customer;. Swinton will be writing to all customers who held these policies to offer them a refund if they feel they were missold. Customers need to respond to these letters to obtain their refunds.
To discuss this and for advice on how to respond to the letters please read here

You can view the Full FSA notice Swinton Group PPI - FSA website

Swinton to offer refunds on over 480,000 PPI policies following FSA intervention

FSA/PN/145/2009
28 October 2009
The Financial Services Authority (FSA) has fined Swinton Group Ltd, the high street insurance broker, £770,000 for serious failings in their advised sales of single premium payment protection insurance (PPI).
Following discussions with the regulator, Swinton has also agreed to contact over 350,000 customers who paid for the PPI and offer a full refund.
Between December 2006 and March 2008 the FSA found that the firm’s PPI sales process was flawed. The problems arose as a result of an “assumptive” selling technique in which PPI was automatically included in insurance quotes without first establishing that the customer had any real demand or need for the PPI cover. This resulted in unacceptable levels of non-compliant sales.
In addition, Swinton did not make it sufficiently clear that PPI was optional and did not properly disclose the cost of PPI at the point of sale. Firstly, the cost was bundled within the initial insurance quote and secondly, Swinton failed to disclose before the sale completed that the policy only cost £1.21 with the remainder of the £15/£20 charged being a fee taken by Swinton.
Swinton’s PPI customers will now be able to get a full refund. Swinton will also pro-actively review previously rejected claims and pay compensation where appropriate. Swinton accrued approximately £7.8 million from its PPI sales.
Swinton exited the PPI market in March 2008 following a request from the FSA when these failings came to light.
Margaret Cole, FSA director of retail enforcement and financial crime, said:
“These were deliberate breaches. Swinton was fully aware it should establish a customer’s need for PPI before recommending it, yet nearly half a million policies were sold to customers who didn’t necessarily require them.
“Swinton’s PPI sales fell a long way short of our requirements and the firm clearly failed to treat its customers fairly. This penalty, the remedial action, and Swinton’s departure from the PPI market - along with our recent announcement outlining the FSA’s tougher measures for regulating PPI – serve as a shot across the industry’s bow to remind it to play fair, or not play at all.”
By agreeing to settle at an early stage of the investigation Swinton qualified for a 30% reduction on the full fine; were it not for this discount, the FSA would have imposed a financial penalty of £1.1 million.
Notes for editors

1. The Final Notice for Swinton Group Ltd can be viewed in full on the FSA website.
2. The PPI was designed to cover monthly direct debit payments for home or motor insurance, if the customer was made redundant or unable to work through disability, injury or sickness.
3. In September 2009 the FSA unveiled measures to protect consumers in the PPI market and ensure they are better treated. The measures also required firms to reopen 185,000 previously rejected PPI complaints and reassess them.
4. In October 2009 the FSA and Mortgage Payment Protection Insurance (MPPI) firms agreed an industry-wide package of measures for consumers, including refunds of around £60 million.
5. In December 2008, the FSA fined Egg Banking plc £721,000 for serious failings in its sales of credit card payment protection insurance (PPI).
6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.

[Amethyst]

Re: Swinton to offer refunds on over 480,000 PPI policies following FSA intervention

1.4.
Swinton has agreed to carry out a redress exercise contacting over 500,000 customers who paid for PPI, and offer them a refund in the terms of the letters attached. In the absence of agreement, the FSA would have taken steps to exercise its powers under section 384 of the Act.


Whilst over 500,000 policies were sold, only 266 claims were paid out;

http://www.fsa.gov.uk/pubs/final/swinton.pdf

These are £15 or £20 policies on top of insurance premiums.

4.6.
From December 2006 until September 2007, Swinton charged customers £15 for PPI. This was made up of a premium of £1.21 (inclusive of IPT) and Swinton’s claims supervision fee of £13.79. In September 2007, Swinton increased the cost of the PPI to £20; the premium remained at £1.21 (inclusive of IPT) and the firm increased its claims supervision fee to £18.79.
4.7.
During the Relevant Period Swinton sold in excess of 500,000 PPI policies generating gross PPI premium of approximately £8.5 million, of which approximately £7.8 million was retained by the firm.

[TUTTSI]

Re: Swinton to offer refunds on over 480,000 PPI policies following FSA intervention

Yehhhh, I knew they would get their comeupenth one day for what they did to us years ago.

What goes arround comes arround.

Tuttsi