The Financial Conduct Authority has reached an agreement with Card Protection Plan Ltd and 13 high street banks and credit card issuers to pay up to £1.3bn in redress to customers who were missold credit card insurance.
CPP was fined £10.5m in November last year for “widespread misselling” of credit card insurance products between January 2005 and March 2011. The fine relates to the firm’s ‘Card Protection’ and ‘Identity Protection’ policies.
The 13 banks and credit card issuers caught up in the misselling scandal, along with CPP, have now agreed to establish a “scheme of arrangement” to process misselling claims. The scheme still needs to receive approval from the High Court and must be voted on by creditors.
The FCA says 7 million people, who between them bought and renewed about 23 million policies, will soon receive a letter from CPP giving more information of the redress process.
FCA chief executive Martin Wheatley says: “We have been encouraged that, working closely with the FCA and despite their different business needs, a large number of firms have voluntarily come together to create a redress scheme that will provide a fair outcome for customers.
“This kind of collaborative and responsible approach is a good example of how firms are taking more responsibility and helping – step by step – to rebuild trust.
“We believe this will be a good outcome for customers who may have been mis-sold the card and identity protection policies. Subject to CPP’s customers approving the scheme, these policy holders will be able to claim a full refund of premiums with interest.
“To try and ensure that as many people as possible hear about the arrangements and that nobody misses out on redress, CPP, the banks and the credit card issuers have agreed to pay for a series of adverts in the national newspapers.”
The banks and credit card issuers who have signed up to the redress scheme are:
• Bank of Scotland
• Barclays Bank
• Canada Square Operations Limited (formerly Egg Banking Plc)
• Capital One (Europe)
• Clydesdale Bank
• Home Retail Group Insurance Services
• HSBC Bank
• Morgan Stanley Bank International
• Nationwide Building Society
• Santander UK
• The Royal Bank of Scotland
• Tesco Personal Finance