Capital One has been fined 175,000 by the Financial Services Authority (FSA) over payment protection insurance (PPI) sales failings.
The fine relates to 50,000 policies sold to customers between January 2005 and April 2006.
The FSA said the card provider had failed to provide full information to customers about policy exclusions.
PPI is a form of insurance that covers people in case they cannot pay loans as a result of illness or unemployment.
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It is for people to be put at risk of buying unsuitable protection insurance through not being given the right information at the right time
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Capital One is the latest firm to be penalised for sales breaches. Last month, GE Capital bank was fined a record 610,000 for similar failings.
In response, Capital One said it accepted the fine and had amended its sales practices.
Failings
Capital One has some four million customers throughout the UK. It is one of the UK’s biggest providers of credit cards.
The FSA investigation centred on the sale of 335,000 PPI policies relating to credit card debt.
Failings pointed out by the FSA included:
- Capital One failed to send a policy document to more than 50,000 PPI customers between January 2005 and April 2006
- Sales scripts did not ensure adequate disclosure of policy features and exclusions to customers
- Capital One’s monitoring of sales calls was not sufficiently effective.
The card provider said it had taken what the FSA had to say on board.
“We consistently review our policies and practices and had made a number of improvements prior to the FSA’s investigation,” Sanjiv Yajnik, Capital One Europe chief executive said.
“The FSA has recognised that Capital One co-operated fully throughout the investigation,” he added.
The PPI industry is worth an estimated 5.5bn a year.
Watchdogs have been carrying out a widespread investigation into the industry. In January, the BBC learned that 10 banks and lenders would face fines following the inquiry.
“This fine and other recent PPI-related enforcement cases show we will crack down where firms fail to treat their customers fairly in this area,” Margaret Cole, FSA director of enforcement, said.
“It is unacceptable for people to be put at risk of buying unsuitable protection insurance through not being given the right information at the right time,” Ms Cole added.
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