Capital One & PPI

[The Debt Star]

Capone have said the PPI on my cred card was sold following the phone call I made to activate my card in 2004. And:

1. They sell PPI on a non-advice basis, they do not provide advice. Their role is to introduce the features and benefits of PPI and to provide "sufficient information" for customers to make their own consscious decision.

2. It is the consumers responsibility to know if they have existing cover and the decsion to purcahse PPI is entirely our own

3. There is no requirement to ask about existing cover if selling PPI on a non-advice basis. The requirement to understand existing cover lies with the consumer.

4. Policy disclaimers are sent following telephone sales, informing of cancellation rights, terms and conditions, exclusions etc. Disclaimer would also have been raed over the phone as well. Standard practice.

5. The PPI amounts vary due to the amount of credit and if I did not want such large PPI premioums I should not have used the credit on my card. I am therefore responsible for the size of the premium.

6. As PPI was sold on the phone there was no requirement for a signed contract. I should have looked at my first statement and requested to come off PPI at that point.

I wrote back saying they should have advised me who was providing the PPI and what commission they would be paying the brokers as this would have affected my decision to buy PPI.

Got a letter today from capone saying that they are under no obligatioon to disclose commission on non-advised PPI sales and that they stand by their position.

Looks like its orf to the FOS, but I have to ask, are they right about the non-advised PPI? Does Yates v Nemo have any bearing here?

[Angry Cat]

Re: Capital One & PPI

Capone have said the PPI on my cred card was sold following the phone call I made to activate my card in 2004. And:

1. They sell PPI on a non-advice basis, they do not provide advice. Their role is to introduce the features and benefits of PPI and to provide "sufficient information" for customers to make their own consscious decision.

2. It is the consumers responsibility to know if they have existing cover and the decsion to purcahse PPI is entirely our own

3. There is no requirement to ask about existing cover if selling PPI on a non-advice basis. The requirement to understand existing cover lies with the consumer.

4. Policy disclaimers are sent following telephone sales, informing of cancellation rights, terms and conditions, exclusions etc. Disclaimer would also have been raed over the phone as well. Standard practice.

5. The PPI amounts vary due to the amount of credit and if I did not want such large PPI premioums I should not have used the credit on my card. I am therefore responsible for the size of the premium.

6. As PPI was sold on the phone there was no requirement for a signed contract. I should have looked at my first statement and requested to come off PPI at that point.

I wrote back saying they should have advised me who was providing the PPI and what commission they would be paying the brokers as this would have affected my decision to buy PPI.

Got a letter today from capone saying that they are under no obligatioon to disclose commission on non-advised PPI sales and that they stand by their position.

Looks like its orf to the FOS, but I have to ask, are they right about the non-advised PPI? Does Yates v Nemo have any bearing here?

Disciplinary history for:
204440 - Capital One (Europe) plc

The following information includes such details of the supervisory, disciplinary and civil regulatory action (but not criminal action) which may have been taken by the FSA under the Financial Services and Markets Act 2000 or civil penalties which may have been imposed by the FSA under the Money Laundering Regulations 2007 in relation to Capital One (Europe) plc and which the FSA considers it appropriate to publish. The FSA's Register does not hold information on action taken by other enforcement agencies.


Date: 15/02/2007 Type of action: Fines
The FSA has decided to impose a financial penalty of £175,000 on Capital One as a result of breaches of the FSA's Principles for Businesses ("the FSA Principles").
Capital One agreed to settle at an early stage of the FSA's investigation and qualified for a 30% (stage 1) discount under the FSA's executive settlement procedures. Were it not for this discount the FSA would have imposed a financial penalty of £250,000 on Capital One.

The FSA decided to impose a financial penalty on Capital One in respect of breaches of the FSA Principles 3 and 6. These occurred over various periods between 14 January 2005 and 5 April 2006, in relation to the sale by Capital One of payment protection insurance ("PPI") policies. The breaches relate to Capital One's:
(1) failure to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems (Principle 3); and
(2) failure to pay due regard to the interests of its customers and failing to treat them fairly (Principle 6).
Capital One breached Principles 3 and 6 by failing to have in place adequate systems and controls in relation to the sale of PPI to ensure that its customers were treated fairly.

As a result of the inadequate systems and controls:
1) Capital One failed to send a policy document to 98,000 of its 1.3 million PPI customers (of which 48,000 related to the period prior to FSA regulation );
2) two out of four script options used for all telephone sales did not ask the customer for consent explicitly to receive only limited information over the telephone;
3) the form of disclosure used in scripts for customers who purchased PPI over the telephone did not ensure adequate disclosure, in an acceptable number of cases, of:
i. policy features and benefits; and
ii. policy exclusions and limitations;
4) Capital One failed to provide customers who purchased PPI other than by telephone with the policy document prior to the conclusion of the contract; and
5) Capital One's compliance monitoring of telephone sales of PPI was not sufficiently effective.
These matters were viewed as serious by the FSA. In particular, Capital One's failure to provide more than 50,000 customers with a policy document (rather than just a policy summary which was provided in all cases) meant that affected customers did not have the opportunity to consider all aspects of the PPI policy, and whether it may have met their demands and needs, prior to purchase.
There are several mitigating factors which were taken into account by the FSA:
1) Capital One proactively engaged in a substantial remediation programme to ensure that all customers who did not receive a policy document, including those who purchased PPI prior to the commencement of FSA regulation, have the opportunity to be recompensed. The cost of this programme, including potential premium refunds, has been estimated to be in the region of £1.1 million in relation to sales made after FSA regulation and £1.9 million before FSA regulation was introduced.
2) Capital One agreed to review all declined claims relating to policies purchased since January 2005 and reconsider the claims in light of information provided or not provided to the customer at the time of sale;
3) Capital One agreed to establish a specialist complaints handling team to deal with any complaints from its customers in relation to PPI;
4) Capital One agreed to communicate to all customers acquired through the telephone channel during the period where scripted disclosure of policy features and benefits was not adequate to encourage customers to read the full terms and conditions of the PPI policy to ensure that the policy meets their demands and needs;
5) on its own initiative, Capital One implemented its own PPI Improvement Process and commissioned external consultants to review its PPI activities; and
6) Capital One co-operated with the FSA's investigation, in some respects demonstrating best practi.

[The Debt Star]

Re: Capital One & PPI

Thanks AC but the fine imposed on the bank doesn't seemed to have made a jot of difference to Capone's response to me.

However, your post will make a tidy attachment to my letter to the FOS 2morrow!

[Angry Cat]

Re: Capital One & PPI

Thanks AC but the fine imposed on the bank doesn't seemed to have made a jot of difference to Capone's response to me.

Not surprised, Debt Star! (along with many others...)

Capone are almost as bad as the rotten Egg!
Capital One fined for mis-selling - Telegraph
Egg fined £721,000 for mis-selling PPI | Money | guardian.co.uk

[The Debt Star]

Re: Capital One & PPI

Just putting my FOS letter together now AC, so cheers again for post #2

[SaltnVinegar]

Re: Capital One & PPI

Cap 1 have more likely made a 'business decision' that its worth taking the risk of another £175k fine by trying to wriggle out of this due to the £millions they would have to pay by rolling over and not trying.

Keep plugging away DS, because if you don't their business decision will prove fruitful........

[Angry Cat]

Re: Capital One & PPI

Just putting my FOS letter together now AC, so cheers again for post #2

DS, check the wording on your credit agreement, application form.
If, Capone used words similar to:
We strongly recommend that you take out this insurance.
Then, it would be an advised sale!

In any event, the key to this is, would you have been able to claim on the PPI?

Or, would you have been precluded from making a claim due to the Limitation and Exclusion clauses?
e.g. Pre-existing condition; self employed etc...

I know just how difficult Capone make things for mis-sold PPI claimants

[Angry Cat]

Re: Capital One & PPI

Sorry DS,
I forgot something that is extremely important in your case:
Distance selling for financial services: explanation of the law

Telephone marketing
Of course it is impractical to suggest that all this information could be provide sufficiently by telephone. So if you market or sell using the telephone, you may supply less extensive information. Of course the more you supply, the easier it is to discharge your duty later should a dispute occur. Similarly, the more information you provide, the clearer the contract will be to the consumer, who will be less likely to dispute anything later.

Best practice is to start the conversation by stating the caller's name and the fact that they are a sales representative employed by or acting on behalf of [supplier’s name]. The caller should then clearly describe the product including the main characteristics. They should also clearly state the total price including taxes, or if it is not possible to give a fixed price then the means of calculating the price. The consumer should also be advised that further information is available on request and that there is the right to withdraw from the contract within the cancellation period.

As the call progresses and the consumer expresses an interest in entering the contract the supplier should provide information to the consumer regarding the respective contractual obligations.

Following up
As well as providing the prior information listed above, the supplier should also ensure that he communicates all the contractual terms and conditions specified above to the consumer on paper or another durable medium (e-mail is permitted). You should do this in good time prior to the conclusion of the contract. Where the consumer has requested that the contract be concluded using a means of distance communication then it should happen immediately after conclusion of the contract. You must also provide the consumer with a copy of the terms and conditions when requested unless you have already communicated these to the consumer and they have not changed.

You should try to provide a copy of the terms and conditions as soon as possible in order to effectively conclude the contract. The cancellation period (discussed below) only begins when the paper or other durable medium copy of the contract terms and conditions is received by the consumer. If the supplier provides the required information in a timely manner the cancellation period will be kept to a minimum and the consumer will have as little time as possible to cancel the contract.

As ever, I am always trying to do too many things at once...

[The Debt Star]

Re: Capital One & PPI

DS, check the wording on your credit agreement, application form.
If, Capone used words similar to:
We strongly recommend that you take out this insurance.
Then, it would be an advised sale!

In any event, the key to this is, would you have been able to claim on the PPI?

Or, would you have been precluded from making a claim due to the Limitation and Exclusion clauses?
e.g. Pre-existing condition; self employed etc...

I know just how difficult Capone make things for mis-sold PPI claimants

It wasn't a tick-box jobby. I ticked "no" originally but the application/CCA at the tick-box slot says:

"I would like to insure my card repayments against redundancy, business failure, accident, sickness or death, for just 79p per £100 of my monthly outstanding balance and I have read and understood the enclosed PPI leaflet."

I have no recollection of the PPI leaflet after this length of time (the account itself was closed in 2007) and I was not sent a copy with my SAR or CCA. However I apparently agreed to PPI o the second round of hard sales when I called up to activate my card for the first time. That's when they got me.

[The Debt Star]

Re: Capital One & PPI

Sorry DS,
I forgot something that is extremely important in your case:
Distance selling for financial services: explanation of the law



As ever, I am always trying to do too many things at once...

Toooooooo late AC! I have sent my FOS letter. Just used the info in Post #2

[Angry Cat]

Re: Capital One & PPI

Toooooooo late AC! I have sent my FOS letter. Just used the info in Post #2

No doubt, you will get the chance to use the information in post #8, later

[The Debt Star]

Re: Capital One & PPI

Sure will!