On 16 January 2008, FSA published the Final Notice it has issued to HFC Bank Limited (HFC) in which it has fined HFC £1.085 million. HFC provides both secured and unsecured loans to customers, and sells payment protection insurance (PPI) on an advised basis in connection with these loans. Many HFC customers had limited access to consumer finance due to their credit ratings.

FSA found that between January 2005 and May 2007, HFC failed to treat its customers fairly by exposing them to an unacceptable risk of being sold PPI when it was unsuitable. HFC was fined for this and also for generally failing to have adequate systems and controls in place for the sale of PPI. FSA found that these failings amounted to a breach of Principles 3 and 9 of its Principles for Businesses, as well as a breach of related rules.

Margaret Cole, Director of Enforcement, at FSA said: "We are determined to see much better practices in the PPI market. We announced in September that we would be imposing higher fines for serious failings in the retail market including against firms who fall short in relation to PPI. The fine against HFC - the biggest PPI fine to date and first since our September announcement - is evidence of our determination in this area."

FSA advised that HFC qualified for a 30% discount of what would have been a fine of £1.55 million by agreeing to settle early. HFC has also agreed to remedial action overseen by external accountants, involving amendments to its sales process and contacting and compensating customers who have been disadvantaged.

For more information on FSA's September 2007 PPI announcement that Ms Cole refers to, see Legal update, FSA publishes latest PPI thematic update.