The FSA said in a ruling during 2005 the bank adopted sales practices by which it neglected to ensure that at least 50,000 customers received important information about payment protection insurance policies. Consumers were, therefore, not able to check what they were covered for, or if the policy was the right for them, the regulator said. The bank had sold approximately 335,000 PPIs during the year.

Margaret Cole, director of enforcement at the FSA, said it is unacceptable for people to be put at risk of buying unsuitable protection insurance through not being given the right information at the right time. "And consumers should also remember that PPI on credit cards and loans is almost always optional and consider whether they need it before signing up," he added.

The fine could have been higher, but the bank was eligible for a 30 per cent discount by agreeing to settle early. The FSA also said the bank had since been carrying out a remedial program.

Capital One Europe's chief executive Sanjiv Yajnik also said the bank consistently reviewed its policies and practices and had made a number of significant improvements prior to the FSA's investigation.

Capital One Bank is the fifth to be fined by the FSA in the past few months. In January, it had fined GE Capital Bank with a record 610,000 pounds on a similar account in January.

Capital One has some four million customers throughout the U.K. It is one of the country's biggest providers of credit cards.