Five dealerships miss-sold the loans insurance, the financial regulator has said.
Five UK motor dealerships have been hit by fines from the regulator, after it emerged that they were miss-selling loan insurance to customers.
The Financial Services Authority (FSA), who charged the firms a total of £175,000, said that over 2,000 customers had been put at risk of buying unsuitable products due to the misdemeanours. The dealerships in question are: GK Group, George White Motors, the Leeds and Doncaster branches of Ringways Garages and Park's (Hamilton).
Payment Protection Insurance (PPI) works by covering a customer's loan repayments in case of sudden illness, injury or loss of income. However, the five firms were found by the FSA not to have properly checked their customers' personal circumstances - which could have led to them not being able to claim on the insurance.
Margaret Cole, the FSA's enforcement director, commented: "Motor retailers that sell PPI have to meet the same standards as the rest of the financial services industry."
"All firms selling PPI must treat their customers fairly, including taking proper steps to make sure sales are suitable and customers are eligible to claim on the policy."
The FSA has fined 11 firms since 2006, as part of its ongoing crackdown on the PPI industry. Earlier this year, the Competition Commission revealed that financial firms were overcharging customers on PPI by around £1.4 billion a year.
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