High street bank Alliance & Leicester was fined a record £7 million today for

High street bank Alliance & Leicester was fined a record £7 million today for "serious failings" over selling techniques for payment protection insurance (PPI).

The Financial Services Authority (FSA) said telephone sales staff at the bank failed to make clear that the insurance for its loans was optional, and they were also trained to put pressure on customers when they queried the inclusion of PPI.

FSA enforcement director Margaret Cole said: "The failings at A&L (Alliance & Leicester) are the most serious we have found. This is reflected in the record PPI fine."
The failings occurred between 2005 and 2007, the FSA said, when A&L sold 210,000 policies at an average price of £1,265.

PPI covers people taking out loans against risks including unemployment or serious illness.
A&L chief executive David Bennett said the bank would pay back any customers found to have lost out unnecessarily from the mis-selling.

Mr Bennett said: "I apologise sincerely for our shortcomings. We will be writing to every customer concerned and will be working with independent accountants and the FSA to ensure that we put right any disadvantage identified.

"Customers can be assured that we are taking this matter very seriously and that we have reviewed and tightened up our processes from December 2007 to ensure that all customers get the right information and advice."

A spokesman for A&L said "it was impossible to say" at this stage how much might have to be paid back to customers.

The bank said that, during the period concerned, 41% of personal loan customers took out PPI with their loan. More than 80% of claims made during the period were paid, it added.
All customers who took out PPI loan insurance following a phone call between January 14, 2005 and December 31, 2007 will be written to.

"The letter will set out the issues and they will then have the opportunity to raise any concerns," A&L said.

The FSA said the failings resulted in "unacceptable levels of non-compliant sales and a high risk of unsuitable sales" over the three-year period.

Ms Cole said: "Customers should be able to rely on impartial advice based on their individual needs and demands. It is particularly unacceptable for a firm to train its advisers to put pressure on customers when recommending insurance cover which they have not asked for and may not need."

The FSA has previously taken action against 18 firms over poor PPI selling techniques.

Institutions fined include Liverpool Victoria Banking Services for £840,000, HFC Bank for £1,085,000, Loans.co.uk £455,000, Capital One Bank (Europe) plc £175,000 and Land of Leather for £210,000.
Ms Cole said: "It is very disappointing that, after three years of regulation, we are still finding serious problems in PPI sales."
The FSA's fine came on the same day that A&L's £1.2 billion takeover by Spanish bank Santander was given the legal green light by the High Court.
The FSA said A&L's agreement to settle at an "early stage" of the investigation and carry out the comprehensive customer check had saved the bank from a £10 million fine.
As well as being the biggest ever PPI-related fine, the £7 million is the third biggest FSA penalty.
The watchdog said the enforcement action started after a visit to the bank in May last year which was part of an industry-wide PPI survey.

Investigators subsequently checked 100 randomly-selected sales calls covering an 11-month period from February to December last year and found that "very few calls appeared fully compliant with its requirements".

"The likelihood is that those findings will have been replicated throughout the relevant period," the FSA said.

Which? Chief Executive, Peter Vicary-Smith, said: “It’s great to see the FSA hitting companies where it hurts. This record PPI fine should send out a clear message to other companies that mis-selling will be severely punished.

“Now the fine has been set, we want everyone who was mis-sold to get their money back. This can be done by ensuring that any communications to consumers are clear and straightforward about their rights.

“Anyone who has a personal loan or credit card should check whether they have a PPI policy and, if they think it was mis-sold to them, should consider making a complaint*.”