Egg apologises to customers
Egg has apologised to customers after being fined £721,000 by the Financial Services Authority(FSA) for mis-selling payment protection insurance (PPI).
The FSA found failings in 40% of egg telephone credit card sales sold between January 2005 and December 2007.
Egg sold PPI with credit cards despite no clear approval from customers and in some cases, customers explicitly refusing the product.
Egg is expected to pay £1.67 million for every 10% of customers who receive a refund. Egg is the second company in a short space of time to breach selling procedure on PPI.
In October The FSA fined Alliance & Leicester £7m for serious failings in its telephone sales of PPI.
FSA Director of Enforcement Margaret Cole said: "Egg used inappropriate sales techniques to try to persuade customers to buy payment protection insurance on their credit card even when they asserted they did not want the cover. All firms must ensure that customers are treated fairly when selling PPI and if a customer does not want PPI, they should not be pressured into taking it.
"We will continue to fine firms where we find PPI failings. It is unacceptable that Egg did not identify the problems with its sales processes despite a series of high profile FSA communications on PPI, including earlier fines on other firms."
Egg said in a company statement: “We are taking the matter very seriously and would like to apologise to any customers who have been affected. We will be contacting all customers impacted by this, giving them the opportunity to review whether the product was or is still suitable for them. A dedicated team of call centre staff will be ready to assist with customer enquiries on this issue.
“Following the FSA visit in September 2007, Egg co-operated fully with the investigation and took the proactive decision to voluntarily cease all telephone sales of PPI.”
The Competition Commission is planning to clean up the industry by banning lenders from selling PPI to borrowers for 14 days after the loan had been agreed. It has spoken to the FSA about its plans.