Sofa firm Land of Leather was yesterday hit with a £210,000 fine by the City's watchdog for putting thousands of customers at risk from lax controls over the selling of payment protection insurance (PPI).
The Financial Services Authority (FSA) said the company sold PPI for nine months until February 2007 "without any effective check on its sales force" to ensure it was being sold fairly.
Around 58,000 customers were exposed to the risk of buying un
suitable insurance, according to the FSA.
Most customers paid for their sofas within the first year, when were they were not charged for the PPI. But around 8,200 who did not settle their loan within 12 months would have paid an average £380 in PPI, the watchdog added.
Land of Leather's chief executive Paul Briant – responsible for overseeing controls on the selling of PPI across the business – was also fined £14,000.
Margaret Cole, the FSA's director of enforcement, said: "Firms must not sell PPI unless they have appropriate systems and controls in place to ensure that their customers are treated fairly.
"Mr Briant's fine sends out a strong message that senior management are responsible for ensuring that their firm has robust and effective systems and controls."
Both the company and Mr Briant would have been hit with higher penalties – £300,000 and £20,000 respectively – but agreed to work with the FSA at an early stage.
A spokesman said: "Land of Leather takes these issues very seriously and has reviewed all the processes around the sale of PPI products.
"We were not mis-selling these products, but we do regret that some of the service processes around their sale were not as robust as our customers have the right to expect. We acted quickly to remedy these weaknesses."
The Competition Commission has been investigating the PPI market since February 2007 and is due to report its provisional findings by the end of the month. Customers paid around £5.35bn in PPI premiums during 2006, according to market research firm Mintel.
The fines are another blow for the Kent-based retailer which has seen a sharp downturn in trading as hard-pressed consumers shy away from spending on 'big ticket' goods.
In the past three months Land of Leather has seen like-for-like sales fall by nearly a third, the group said in a trading update two weeks ago.
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