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Millions set for compensation over missold credit card insurance

Millions of bank customers who were missold credit card security products could be in line for compensation after the FCA reached a voluntary agreement with 11 high street banks and insurance provider Affinion.

The regulator says around two million customers will receive a letter from the compensation scheme, called ‘AI Scheme Ltd’, giving information about making a claim against their bank.

The scheme must now be voted on by eligible customers and formally approved by the High Court before compensation can be paid.

FCA director of supervision and authorisations Tracey McDermott says: “If approved, this scheme will provide those who may have concerns about the way their card security product was sold to them with a simple and free way to claim compensation.

“We have been encouraged that, working closely with the FCA, a large number of firms have voluntarily come together to create a redress scheme that will provide a fair outcome for customers. Such a willingness to take steps to resolve historic problems is an important step to restoring trust in the financial services. 

“I would encourage anyone who receives a letter from ‘AI Scheme Limited’ in April or May 2015 to vote for the scheme. The scheme will provide access to a dedicated helpline and a website, which customers should use if they have questions or need assistance.”

The FCA says customers were sold credit card security products to cover fraudulent use of a card if it was lost or stolen. It says this was unnecessary, however, because the card issuer would typically be responsible for any transactions after the cards were reported as being lost or stolen

It is not yet clear how much compensation the banks could have to pay out in total, although the average cost of the card security product was £25 per year.

The banks participating in the scheme are:

  • AIB Group (UK) Plc trading as First Trust Bank in Northern Ireland and Allied Irish Bank (GB) in Great Britain
  • Barclays Bank Plc
  • Capital One (Europe) Plc
  • Clydesdale Bank PLC
  • HSBC Bank Plc
  • Lloyds Bank Plc
  • Northern Bank Limited trading as Danske Bank
  • Santander UK Plc
  • Tesco Personal Finance plc
  • The Co-operative Bank Plc
  • The Royal Bank of Scotland Plc

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Yet another bank scandal? Will anyone be surprised? I suspect that many of us are just waiting for the next one in a long line of such scandals.

    I always thought the role of the regulator was to prevent this kind of thing happening. There will always be situations where some miss deeds are hidden and only come to light after the event, but this kind of insurance was being sold openly for many years, as was PPI etc. The fact that redress is to be paid is welcome but surely the regulator should have done its job properly in the first place.

    Could this be why we are seeing so few bankers in the dock? Perhaps their defence could well be that the regulators knew what they were doing but did nothing about it. This would imply that the regulators were complicit in what has been going on and therefore share responsibility and therefore should equally be in the dock.

  2. I agree with Alan, the FCA/FSA knew this was going on but did not stop it.
    This raises the question of complicity in my humble opinion.

  3. So you’re to receive a letter concerning compensation for mis-sold insurance headed ‘Al Scheme Ltd’.
    Truly inspired.

  4. Good work by the FSA. The comprehensive salary and benefits packages are finally paying off for the public. Amazing how long this and other crimes by bankers can go on, without getting noticed by the regulator, who supposedly monitors them several times per year. Even Pay Day lenders, are fully authorised. All the banks still have licences, after PPI, which went on for decades with no one noticing anything on toward.

    I envy how bankers are walking free, with bail out money to boot. Mr Wheatley, you must stop banks from ‘influencing’ regulation. Crime and corruption seems to be safe and highly profitable at the moment.

    Anthony Badaloo is Principal at Church Hill Finance http://www.church-hill.net

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