Land of Leather PPI Fine

• PPI

The City watchdog has imposed its first fine on a high street chain under its ongoing investigation into the lucrative payment protection insurance market, warning other retailers they face a similar fate if they too fail to employ adequate checks.

Land of Leather, the furniture retailer that has been one of the worst affected by the consumer downturn, has been fined £210,000 for allowing staff to sell insurance without adequate training.

Chosen for investigation in effect arbitrarily – the Financial Services Authority had no prior suspicion of wrongdoing – the company was found to have put consumers at risk of buying inappropriate cover for nine months until last February.

Margaret Cole, the FSA’s enforcement director, warned retailers “whose primary business is not selling general insurance will be held accountable to the same regulatory standards as the rest of the financial services industry”.

Paul Briant, chief executive, was also fined £14,000 for failing to properly oversee the sale of the insurance, which helps policyholders repay debts if they are made redundant, fall sick or have an accident.

It comes after the Office of Fair Trading, in a separate ruling this year, raised concerns that Land of Leather’s advertisements, which had contained the expression “Leave your chequebook at home”, were considered to be in breach of the credit regulations.

The FSA has visited hundreds of financial institutions and retailers during the past three years. Its two chief areas of concern are products sold to customers who are too old to claim by the terms of the policy or insurance against unemployment sold to applicants who are self-employed.

The PPI typical claim rate is low – about 25 per cent, the FSA reckons – compared with other kinds of insurance. The Financial Ombudsman Service upholds about 80 per cent of complaints regarding single premium PPI, more than any other form of insurance.

Land of Leather will write to customers to clarify their policy terms. It will have to give refunds to those who have been mis-sold. The company said:` “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.”

Most paid for their sofas within the first year, when were they were not charged for the PPI. But the FSA said about 8,200 who did not settle in 12 months would have paid an average of £380.