LRUK (RETAIL) LIMITED

Activities and protection

What they can do, and how you are protected

• Lend or arrange credit No FSCS cover
  Consumer credit is not covered by the FSCS, so there is no compensation scheme if the firm fails.

Complaints: You can refer a complaint about this firm to the Financial Ombudsman Service for free, whichever activity it relates to.

Track record

Action taken against them

1 fine in 2006, £270,000 in total. This is part of the official register record and is worth reviewing before going ahead.

• Fined £270,000 on 20 December 2006

  On 20 December 2006 the FSA imposed a financial penalty of £270,000 (the penalty) on Redcats (Brands) Limited (Redcats) in respect of breaches of the FSA Principles and Rules which occurred between 14 January 2005 and 13 July 2006 (the relevant period). The following FSA Principles are relevant: 1. FSA Principle 2 (due skill, care and diligence) 2. FSA Principle 3 (management and control) 3. FSA Principle 6 (customers' interests) The following rules are also relevant: 1. in the part of the FSA Handbook (the Handbook) entitled Training and Competence (TC) TC2.4.5(1)R, TC2.6.1R and TC2.8.1R; and 2. in the part of the Handbook entitled Insurance: Conduct of Business (ICOB) 4.3.1R, 4.3.2R, 4.4.1R, 4.4.7R and 5.5.14R. By agreeing to settle at an early stage of the FSA's investigation, Redcats 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 penalty of £386,000 on Redcats. The failings relate to Redcats' failure to conduct its business with due skill, care and diligence; failure to take reasonable care to organise and control its affairs responsibly and effectively; and failure to pay due regard to the interests of its customers and treat them fairly. The FSA views Redcats' failings as particularly serious because: 1. a significant number of customers were provided with insufficient information about the PPI policy features, terms, exclusions and limitations through its telephone sales channel. In some instances customers may have agreed to purchase the policy but were unaware that they could not claim under certain parts of the policy; 2. despite stating that its sales were made on an advised basis, it failed to comply with the regulatory requirements or advised sales. As a result a significant number of customers were sold PPI without being provided with personal recommendations or advice, either verbally or in writing, as to why the PPI policy met their demands and needs; 3. there were weaknesses in the way that Redcats operated and maintained its compliance systems, training and competence arrangements and sales processes; and 4. Redcats only discovered certain deficiencies in its advised sales process as a result of the FSA thematic visit rather than through the operation of its systems, procedures and internal reviews. Whilst Redcats identified certain other deficiencies through its internal PPI reviews, recommendations from these reviews were not implemented promptly or efficiently until after the FSA thematic visit because it incorrectly assumed that it was more appropriate to delay implementation until after the visit had occurred. As a result, approximately 160,100 customers were sold PPI, which may not have been suitable for their individual needs. Redcats mitigated the seriousness of its failings by taking the following measures: 1. engaging an independent consultant to review, produce individual reports and assist in the implementation of changes to its compliance arrangements and systems, its arrangements for treating customers fairly, its training and competence regime and its sales process; 2. committing to a remedial action plan. The plan involves increasing its compliance resources, conducting various customer contact exercises and questionnaires and redress where appropriate; 3. co-operating fully with the FSA and moving quickly to agree the facts and efficiently resolve the case. Without this level of co-operation the financial penalty would have been higher; and 4. voluntarily suspending all new PPI sales in order to implement a compliant sales process, shortly after the commencement of the FSA investigation. During the suspension, a total of 279 customers were able to apply for PPI as a result of system anomalies. The customers affected were not disadvantaged.

Common questions

Frequently asked questions