Regency Mortgages did not treat customers fairly, the FSA said, meaning that many could have taken on debt they did not need due to poor information.
Managing director for the FSA’s retail markets, Clive Briault, said: “Regency exposed its customers to an unacceptable level of risk and our action sends out a message to firms operating in the payment protection market that they must operate in a way that treats their customers fairly and meets regulatory requirements.”
This is the first fine that the FSA has imposed for mis-selling of PPI, a market that is currently being investigated by the Officer of Fair Trading.
Mr Briault said that PPI is a “risk to consumers” as many were sold it when they took on loans, but often find it hard to claim compared to other types of insurance.
However, Regency hit customers even harder, with the FSA finding that they got people into debt selling cover that they already had or policies they could not claim on.