New Model Adviser - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

FSA fines PPI pushers £120k

1 Comment
FSA fines PPI pushers £120k

The Financial Services Authority has fined the bosses of a collapsed mortgage network a combined £120,000 for pressuring advisers to sell payment protection insurance (PPI).

Black and White Group chairman Christopher Ollerenshaw and chief executive Thomas Reeh were originally fined £250,000 and £150,000 respectively by the regulator, but these fines were reduced following an appeal to the Upper Tribunal.

The FSA fined Ollerenshaw £70,000 and Reeh £50,000 for pressuring advisers to sell PPI products without ‘due regard to their suitability and to recommend products from a particular lender without due regard to their suitability’.

It said that the firm failed to maintain adequate compliance systems and created a culture focused on maximising sales without trying to treat customers fairly.

The fines were reduced due to financial hardship.

The tribunal imposed a ban on Ollerenshaw, but decided against this for Reeh in the light of mitigating circumstances.

The FSA also banned Adrian Childs, Black and White Group former chief operating officer, from holding a senior position in regulated financial services because he did not understand, or take steps to understand, how to perform his role.

Childs would have been fined £50,000 but was declared bankrupt in 2009.

In 2005, following a FSA visit to Black and White, the regulator wrote to the firm over its concern regarding its lack of commitment to good corporate governance and regulatory compliance. Following another warning Reeh wrote to the FSA and said it was ‘committed to getting everything right’.

In 2007 a former Black and White employee made serious allegations about the firm to the FSA leading to a further visit from the regulator, which Ollerenshaw and Reeh said caused ‘an immediate and disastrous loss of confidence’ in the company resulting or accelerating its demise.

It went into administration on 15 February 2008 and liquidation on 23 June 2008.

PPI sold by Black and White accounted for 20% to 25% of its revenue. The FSA found that the staff were incentivised through cash prizes given to the salesperson who sold the most PPI.

The FSA found that Reeh sent employees emails telling them: ‘If you can’t fit a lump sum into the frame or it’s not appropriate … then get a monthly policy at the very least’.

Another email said: ‘Guys not a bad number, but a very poor retention, very poor! We need to address this now and take action, £5,000 in ASU over nine deals and we call ourselves salesmen?’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Comment & analysis