The FSA has fined Swinton £770,000 for misselling PPI.

Following a review of high street insurance broker Swinton’s Payment Protection Insurance (PPI) sales process, the Financial Services Authority (FSA) has released its findings and said it has fined the company £770,000 for “serious failings.”

The FSA reviewed Swinton’s PPI sales process between December 2006 and March 2008 and found that sales advisors were using an “assumptive” selling technique, in which PPI was automatically included in insurance quotes without establishing whether the customer required it.

The broker did not make it sufficiently clear to customers that PPI was optional and then failed to disclose before the sale completion that the policy only cost £1.21, with the remainder of the £15/£20 charge being Swinton’s fee.

As Swinton agreed to settle early on in the FSA’s investigations, it has avoided the maximum financial penalty of £1.1 million, and instead has accepted a reduced fine.

According to the FSA, Swinton has also agreed to contact over 350,000 customers who paid for PPI and offer a full refund.

In a statement, the insurance broker said it is taking the matter very seriously and plans to contact all those customers concerned: “The company apologises to any customer affected, and has set up a dedicated unit to deal with the PPI cases.” It said it stopped selling PPI in March 2008.

However, Swinton tried to defend itself claiming that its “simple, low-cost PPI product” was different to the more commonly sold PPI costing hundreds, or sometimes thousands of pounds alongside mortgages and loans.

Margaret Cole, FSA Director of Retail Enforcement and Financial Crime, was scathing in her judgement: “These were deliberate breaches. Swinton was fully aware it should establish a customer’s need for PPI before recommending it, yet nearly half a million policies were sold to customers who didn’t necessarily require them.

Wendy Alcock, an analyst at MoneySavingExpert.com, commented on the news: “It’s been nearly a year since the FSA fined a PPI provider for misselling, so it’s good to see it’s still on the case. It’s also a positive move asking Swinton to review previously rejected claims.”

She said that anyone with a loan, credit or store card needs to check if they were missold PPI so they too can reclaim.

The FSA said that Swinton accrued approximately £7.8m from its PPI sales.