The owner of used car dealer Carcraft has been fined £91,000 by the Financial Services Authority over its failure to properly monitor staff selling £3m of payment protection insurance.
The regulator fined Rochdale-based UK Car Group for failing to take reasonable steps to ensure the suitability of advice given to customers over PPI between April 2007 and September 2008, reports the Manchester Evening News.
Its 10 dealerships sold 8,260 policies in the period, generating a gross income of more than £1.5m.
UKCG would have been fined £130,000, but qualified for a 30 per cent reduction after agreeing to settle the case at an early stage of the investigation.
The FSA said UKCG sold customers consumer credit agreements, essentially personal loans to buy cars, which in many cases included PPI.
The regulator said it was crucial that UKCG made sure customers fully understood the PPI products they bought and that company records properly reflected the advice given in each sale.
However, it failed to keep sufficiently-detailed records of the advice provided to customers, and more general concerns were also raised over staff competence, the monitoring of individual advisers and the provision of proper documentation to customers.
While it took some steps to correct concerns, which were originally raised in an internal audit by UKCG's compliance department, the firm failed adequately to address, respond to or rectify the issues identified, said the FSA.
UKCG stopped selling PPI in 2010.
A Carcraft spokesperson said: "Carcraft is disappointed that the Financial Services Authority found it necessary to take action on an issue which occurred several years ago. However, Carcraft has fully cooperated with the FSA's investigation.
"The FSA had no cause for concern about the design and structure of Carcraft's systems and controls in relation to PPI selling, and stated that Carcraft's sales model and standard documentation were sound.
"The amount of the fine was reduced to reflect the business’ complete cooperation with the FSA and willingness to agree a settlement . Carcraft is continuing to strive for excellence in all areas with a focus on delivering exceptional customer service, and has recently achieved RAC accreditation for all its cars.”
> Carcraft blasted by OFT for misleading customers (10/11/2011)