AM Online

Finance Insight: FSA fines dealers £175,000

Two dealerships in the £80 million-turnover Ringways Motor Group were among five fined a total of £175,000 by the Financial Services Authority (FSA).

 

The reason: “serious breaches” in the way they sold payment protection insurance (PPI). “We bundled the fines together to make firms and consumers sit up and take notice”, said Will Amos, head of retail in the FSA enforcement division.

Stephen Russell, managing director of Ringways, was shocked by the fine. “I was bitterly disappointed,” he said.

“We had no complaints from customers and I take a pride in heading a professionally-run business. I was determined to conform to the PPI regulations.”

He is now “thinking long and hard” about continuing to sell PPI, which he said formed a small part of Ringways’ turnover and was more a service to customers than a profit stream.

Russell has written to 445 customers sold PPI, advising them they have a right to a refund if they felt they were mis-sold policies.

The FSA accepts that Ringways and the other groups did not deliberately mis-sell PPI, nor act in a reckless way.

The fines were because of failures in the FSA-regulated sales process.

Russell believes the regulations are open to interpretation, and so complex that it is difficult to comply with them.

“The FSA expects us to ask customers intrusive questions – such as ability to pay – that many people are not prepared to answer,” he said.

Amos does not accept over-complexity: “We have found small as well as large companies that sell PPI policies in the correct way.

It is possible to do so, and we want to assist dealers because that is in the best interests of people buying the policies.”

FSA-regulated car and motorcycle dealers are invited to a free roadshow at Ilkley, West Yorkshire, on October 2 (details at www.fsa.gov.uk with other advice).

The FSA fined Ringways Garages at Leeds (Ford franchise) and Doncaster (Ford and Mazda) a total of £35,000 (they are separate limited companies within the group).

They avoided a larger penalty (£50,000) by paying quickly.

The other companies also claimed the FSA’s 30% reduction: Park’s of Hamilton paid £61,600 (£88,000 pre-discount), GK Group £51,100 (£73,000) and George White Motors £28,000 (£40,000). Two issued statements but declined to answer questions (George White Motors did not return AM’s call).

Park’s of Hamilton says: “We are pleased the FSA has confirmed it does not believe we acted in a deliberate or reckless manner. We have been working closely with the FSA and have agreed a remedial action plan.

“We are delighted the FSA is committed to helping motor retailers better understand its rules, and will be represented at the October 2 roadshow as part of our ongoing commitment to improve our sales process.”

Read this story in full in the 5 Sept 2008 issue of AM. To subscribe to AM magazine click here or call 01733 468659.

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Comment as guest


Login  /  Register

Comments

No comments have been made yet.