Record fine for store card provider
31 Jan 07
GE Capital Bank penalised for mis-selling payment protection insurance
GE Capital Bank has been fined a record £610,000 by the Financial Services Authority for mis-selling payment protection insurance.
The bank provides store cards for many high street retailers and was accused of failing to protect customers from being sold insurance they do not need.
Payment protection insurance provides financial cover if policyholders are unable to pay bills due to illness or being made redundant. However, it is alleged to be overpriced and often sold to the wrong people. Complaints have also been made of difficulties in having claims accepted.
More than 850,000 insurance policies were sold by GE Capital Bank in 2005, despite the FSA finding that the bank had failed to review and amend its sales methods in the wake of evidence of widespread non-compliant selling practices. The FSA also discovered that the bank had not ensured that customers were given enough information about their policies, and failed to contact victims of mis-selling.
The FSA emphasised that it was important for people taking out store cards to know that payment protection insurance was not compulsory, and to consider whether they needed it before signing up.
A spokesperson for the bank said that it was continuing to take steps to make sure that no custiomers had lost out financially and would be honouring claims made from 2005 onwards, even if they would otherwise be rejected because of contract exclusion clauses.