The UK Financial Services Authority has imposed a public censure on Eastern Western Motor Group, a franchised car dealer specializing in the sale of new and used cars, for failures relating to its sale of payment protection insurance in connection with vehicle finance arrangements.
According to the Financial Services Authority (FSA), Eastern Western Motor Group (EWMG) failed to organize and control its regulated business effectively. The FSA stated that, among other failings, EWMG did not keep an adequate record of its sales of payment protection insurance (PPI) and did properly inform customers of the total price of the policy.
The FSA also said that EWMG, which has a significant presence in Scotland and Newcastle-upon-Tyne, failed sufficiently to apportion compliance responsibilities among its senior management, as well as not ensuring that its sales staff were trained and monitored adequately.
Margaret Cole, the FSA’s director for enforcement, commented: EWMG’s failings, particularly those regarding the statement of price, created a risk of consumer detriment. A clear statement of price is essential in order for a customer to be able to determine whether the PPI policy is the right product for them.
She concluded: EWMG could not determine whether sales staff were operating in a way which paid due regard to the information needs of customers, as there was little or no monitoring of sales staff. We have taken a number of enforcement actions relating to PPI recently and there will be more to follow.
The regulator said that it took a number of mitigating factors into account when deciding upon the penalty level. It stated that the number of PPI policies sold was low, and that EWMG’s solicitation of independent compliance advice prior to FSA supervision interest indicates an intention to adhere to FSA requirements.
The FSA said that EWMG was fully cooperative and that, in the relevant period, only one complaint was received in relation to PPI cover. The regulator also revealed that, if it had not been for the limited number of PPI policies actually sold, a financial penalty would have been proposed.