GECB's main business is providing credit finance through store cards, credit cards and sales finance.
The store cards are usually branded in the name of the retailers (who are appointed representatives of GECB) and the insurance is usually offered to customers at the till when they are applying for a store card. If not bought at the till, customers are contacted later by GECB's telesales staff.
The FSA found that GECB failed to review and amend its procedures for selling insurance in light of its own evidence, emerging from Q2 2005, of widespread non-compliant selling practices. The breaches arose in the following areas:
GECB is continuing to carry out a remedial action programme to review and improve its systems and controls. To reduce the risk that customers may have lost out GECB is carrying out a comprehensive customer contact exercise and will pay compensation where appropriate.
In this particular case the financial impact on most customers was likely to have been modest. The FSA took these factors into account in determining the level of the financial penalty.
By agreeing to settle at an early stage of the FSA investigation GECB qualified for a 30% discount under the FSA's executive settlement procedures – without the discount the fine would have been £870,000.
Margaret Cole, FSA director of enforcement, said: "Millions of people take out store cards every year. They need to know that PPI is almost always optional and should consider whether they need it before signing up.
"Our focus on PPI will remain very high this year. We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly."
The GECB fine follows two phases of FSA work looking into PPI and the way it is sold. By the end of June the FSA will have visited over 200 PPI firms in two years.