An agreement has been reached between the Financial Conduct Authority (FCA) and Card protection Plan Limited (CPP) together with 13 high street banks that will start the process for paying compensation to seven million customers who were mis-sold Card Protection and Identity Protection policies.
The seven million customers should be getting letters from CPP outlining the process involved shortly.
According to the FCA these customers, who between them took out or renewed some 23 million policies, had been given unclear or misleading information about the products on offer. Having already been fined Â£10.5 million in November 2012 CPP will now have to set aside money for compensation as the claims come in. The banks involved will also be facing the costs as they were the ones that 'introduced' the customer to CPP's products.
There were two types of policy involved: 'Card protection', which cost Â£30 a year and 'Identity Protection', which cost Â£80 a year.
However, before redress can be paid the customers have to vote on it and the scheme has to be approved by the High Court.
The FCA says that the firms involved will also be advertising this to the public to ensure that as many customers as possible who have been affected will come forward. They can expect to receive a refund of premiums paid since 14th January 2005 minus any insurance payouts plus interest at 8% (statutory – although this is normally paid out by financial institutions on a simple interest basis as opposed to compounded and is also normally taxable as an income).
The following high street banks have agreed to the process:
* Bank of Scotland Plc (part of Lloyds Banking Group)
* Barclays Bank Plc
* Canada Square Operations Limited (formerly Egg Banking Plc)
* Capital One (Europe) Plc
* Clydesdale Bank Plc (part of National Australia Group Europe)
* Home Retail Group Insurance Services Limited
* HSBC Bank Plc
* MBNA Limited
* Morgan Stanley Bank International Limited
* Nationwide Building Society
* Santander UK Plc
* The Royal Bank of Scotland Plc
* Tesco Personal Finance Plc
CPP’s Card Protection product was also known as Card Guard (offered by HSBC); Card Safe (offered by M&S Money); Barclaycard Card Protection; Barclays Cardholder Protection; NatWest Card Protection; Egg Emergency Cover; Card Protection Plus and Commercial Card Protection (which were sold by CPP and a number of its business partners). For more information see the FCA statement here.