The online bank Egg, owned by Citigroup (NYSE:C) was found guilty of insurance mis-selling on its credit card payment protection insurance (PPI) to nearly half its customers over a three-year period by the Financial Services Authority (FSA).

According to the FSA around 40 percent of Egg customers who brought the controversial insurance between January 2005 and December 2007 are said to be mis-sold the policies.

Payment Protection Insurance (PPI) an insurance cover that covers the repayments on your credit card if the credit card holder became sick, unemployed or was involved in an accident.

The FSA the financial watch dog investigated the Citigroup owned bank and found that the sales staff were over selling the PPI and also told the customers that they could cancel their policy later, the investigation revealed that the bank had told the staff to sell the PPI in this way.

Source: timesonline

The Bucket List divx

The British financial watchdog the FSA is looking at ways to tighten its grip on Payment Protection Insurance providers, the FSA have been investigating how the insurance is sold alongside personal loans.

The FSA said that it was “escalating” its regulatory intervention on PPI sales due to what it found in its investigation. They will be putting in measures to protect the consumers and will be considering what regulatory powers are the most appropriate to deliver a fair outcome, this could lead to fining the providers of the insurance product.

The Financial watchdog’s investigations showed that some customers were not told the monthly cost of their PPI when it was sold along with an unsecured personal loan, although at a time of increasing indebtedness and unemployment it is essential for people to protect themselves against losing their income.

The FSA have said that they should have an outcome on the investigation by the first quarter of 2009.

Read the full article in the ukreuters