Egg fined over payment protection insurance

Online bank Egg has been fined £721,000 over the way it sold notorious payment protection insurance.

This scandalous product is supposed to help you meet commitments such as mortgage repayments if you fall ill or lose your job, but it has been routinely mis-sold - either being very over-priced or sold to people (like those who are retired) who can't benefit from it.

The City watchdog the Financial Services Authority announced that it found failings - like not revealing vital exclusion clauses - in around 40 per cent of sales calls made by Egg between January 2005 and December last year.

Egg will now write to 106,000 customers and faces paying compensation of around £1.7 million.

So far 19 firms have been penalised by the FSA over the way they sold payment protection insurance, Alliance & Leicester being hit with the biggest fine of £7 million.

FSA director of consumer 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."

The bank said: "Egg has worked constructively with the FSA to settle this matter as quickly as possible. We are taking the matter very seriously and would like to apologise to any customers who have been affected."