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FSA/PN/096/2008
21 August 2008

The Financial Services Authority (FSA) has today imposed fines totalling more than £175,000 on five motor retailers for serious breaches relating to the sale of Payment Protection Insurance (PPI), which exposed a total of 2,175 customers to the risk of being sold unsuitable PPI policies.

GK Group Limited, George White Motors Limited, Ringways Garages (Leeds) Limited, Ringways Garages (Doncaster) Limited and Park’s of Hamilton (Holdings) Limited sold PPI alongside loans for a car or motorbike.

Among the shortcomings identified:

• the firms failed to gather enough information about each customer (including pre-existing medical conditions, existing insurance cover and benefits received from employers), creating the unacceptable risk of unsuitable sales of PPI;
• the firms failed to monitor the quality of the advice given by sales staff and to ensure that appropriate sales processes were followed; and
• one firm did not adequately assess whether customers were eligible to claim for benefits from the PPI policies they sold, and another did not assess complaints properly.

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."

Each of the firms qualified for a 30% reduction in penalty by settling at an early stage of the FSA’s investigation.  The FSA imposed financial penalties of £51,100 on GK Group Limited (£73,000 pre-discount), £28,000 on George White Motors Limited (£40,000 pre-discount), £61,600 on Park’s of Hamilton (Holdings) Limited (£88,000 pre-discount) and £35,000 together for Ringways Garages (Leeds) Limited & Ringways Garages (Doncaster) Limited (£50,000 pre-discount).

Some of the firms have stopped selling PPI as a result of feedback from the FSA's visit.  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.  The firms fully co-operated with the FSA’s investigation.

Notes to editors

1. The Final Notices for GK Group Limited, George White Motors Limited, Ringways Garages (Leeds) Limited & Ringways Garages (Doncaster) Limited and Park’s of Hamilton (Holdings) Limited are available on the FSA website.  These include background to the cases, the relevant statutory provisions and requirements contravened and the factors taken into account when determining the most appropriate disciplinary measure.
2. The firms have been authorised by the FSA to advise on, arrange and deal in non-investment insurance contracts since 14 January 2005.  GK Group Limited (headquartered in Chesterfield, Derbyshire), George White Motors Limited (headquartered in Swindon, Wiltshire) and Ringways Garages (Leeds) Limited & Ringways Garages (Doncaster) Limited were in breach of the FSA’s Principles for Businesses 9 and associated rules.  Park’s of Hamilton (Holdings) Limited (headquartered in Hamilton, Lanarkshire) was in breach of Principles 6 and 9 of the FSA’s Principles for Businesses and associated rules.
3. The FSA's thematic work on the sale of PPI published in September 2007 found improvements in some areas, but also that many firms selling this insurance were still failing to treat their customers fairly.  The FSA introduced new rules in its Insurance: New Conduct of Business Sourcebook in January 2008 designed to improve PPI selling practices.  The FSA has conducted further follow-up thematic work on PPI this year across different industry sectors and the findings of this are due to be published in the autumn.   
4. To help consumers make informed decisions, the FSA's consumer pages - Moneymadeclear - includes questions that people should ask themselves before taking out PPI and a new comparative information table for PPI.
5. The FSA has previously fined eight firms over poor PPI selling practices: Liverpool Victoria Banking Services £840,000, HFC Bank £1.085 million, Regency Mortgage Corporation Limited £56,000, Loans.co.uk £455,000, Redcats (Brands) Limited £270,000, GE Capital Bank £610,000, Capital One Bank (Europe) Plc £175,000 and Land of Leather £210,000.  It has also imposed a public censure on Eastern Western Motor Group Limited and Cathedral Motor Company Limited for PPI-related failings.  Three other cases have been concluded where problems relating to PPI also featured - Capital Mortgage Connections Limited £17,500, Home and County Mortgages Limited £52,500 and Hadenglen Home Finance Plc (£133,000 for the firm and £49,000 for its chief executive).
6. More information for motor retailers can be found on the FSA website.
7. The FSA is committed to helping motor retailers better understand its rules.  It is holding a free roadshow for car and motorcycle traders on Thursday 2 October 2008 at the Craiglands Hotel, Ilkley, West Yorkshire.  This event will look at the issues of FSA compliance that motor retailers want to know more about.  For further details or a booking form please visit the FSA website.
8. 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.
9. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.