Cathedral is a franchised car dealer with four branches in the Midlands trading as Arbury. Its primary business is the sale of new and used cars with PPI being sold on an advised basis to cover vehicle finance agreements.
Cathedral failed to organise and control its regulated business responsibly and effectively. In particular, there was limited or no monitoring of its staff and consequently it could not determine whether its sales staff paid due regard to the needs of customers.
Cathedral did not sufficiently apportion compliance responsibilities among its senior management and did not ensure appropriate training of its staff.
Cathedral also failed to provide customers with certain key documents before conclusion of the sale, creating a risk of consumer detriment.
Margaret Cole, FSA director for enforcement, said: "The sale of PPI is a priority for us due to the high potential risk for consumers in the way this product is sold and we are determined to see much better practice in this area.
“This is the second enforcement action we have taken against a car dealer in connection with PPI sold on vehicle finance agreements and it is important that firms whose primary business is not selling general insurance should adhere to our rules just as much as mainstream brokers.
Cathedral's failings, particularly in relation to the monitoring of sales staff, created a risk of consumer detriment. We have taken a number of enforcement actions relating to PPI recently and more cases are in the pipeline."
The public censure follows two phases of FSA work looking into PPI and the way it is sold. A third phase is underway and by the end of June the FSA will have visited over 200 PPI firms in two years.
In determining the appropriate disciplinary measure, the FSA took into account a number of mitigating factors. The number of PPI policies sold by Cathedral was low (257 in 16 months) and after the problems were identified during an FSA thematic visit in May 2006, Cathedral voluntarily suspended PPI sales while it satisfied itself that future sales would be compliant. Cathedral has taken steps to improve its systems and controls, record keeping and training and monitoring arrangements and has also agreed to carry out an appropriate customer contact exercise.