Egg fined £721,000 for PPI sales

Egg has been fined £721,000 for misselling payment protection insurance to its credit card customers.

The Financial Services Authority (FSA) found failings in 40 per cent of PPI telephone sales calls made by Egg between January 2005 and December 2007.

Customers who have debts can take out PPI to protect their repayments in the event they lose their job and are unable to pay.

Egg – bought from Prudential by Citigroup in early 2007 - told its sales staff to overcome customer objections by over-emphasising the positive features of the policy, or to tell the customer they could take the PPI for a free period and cancel it later if they did not want it.

In some cases, even when the customer did not agree, PPI was applied to their credit card anyway.

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."

The FSA said Egg will have to pay "substantial" compensation to its customers in addition to the fine, which could run to millions of pounds.

In a statement, Egg said: "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."

The FSA has taken action against 19 firms over poor PPI sales, after cracking down on this type of insurance.

Often sold at the same time as a loan, PPI sales have come under the spotlight as often being poor value for money and unsuitable, as well as being forced on customers without their knowledge to being described as necessary for loans to go ahead.