FSA Hands Out Another PPI Fine

The Financial Services Authority has fined Redcats (Brands) Limited £270,000, which trades in the UK under the brand name of Empire Stores and has a tie in with sub-prime lender London Scottish Bank Plc, for failing to treat its customers fairly when selling Payment Protection Insurance (PPI) in connection with home shopping products. The regulator found that Redcats did not have adequate systems and controls in place to minimise the risk of unsuitable sales.

There were also weaknesses in the way that Redcats operated and maintained its compliance systems, training and competence arrangements and sales processes.

Redcats’ breaches were particularly serious because they meant that over an 18-month period approximately 160,100 customers were sold PPI which might not have been suitable for their individual needs.

Redcats specialises in home shopping with PPI sold to cover instalment payments for the merchandise bought through catalogues by phone, post or via the Internet. The FSA investigation found that a significant number of customers were provided with insufficient information about the PPI policy features, terms, exclusions and limitations through its telephone sales channel.

Despite stating that its sales were made on an advised basis, Redcats failed to comply with regulatory requirements for advised sales. As a result a significant number of customers were sold PPI without being provided with personal recommendations or advice, either verbally or in writing, as to why the PPI policy met their demands and needs.

The FSA has confirmed that PPI mis-selling is a priority for enforcement and that other cases are pending. However, following action against Loans.co.uk (fined £455,000 in October 2006),the FSA revealed to Debt on our Doorstep that they had no plans to monitor the number of consumers reimbursed as a result of remedial plans put in place by the lenders following the fines.

Redcats also trades across the world under a number of different brand names as follows:

In France: La Redoute, La Maison de Valérie, Vertbaudet, Somewhere, Cyrillus, Daxon, Edmée
In Scandinavia: Ellos, Josefssons
In the United States: Chadwick’s, Metrostyle, Jessica London, Lane Bryant Catalog (changing to Woman Within), Roaman’s, KingSize, Brylane Home, The Sportsman’s Guide.