Compensation package agreed for consumers sold card security products

The Financial Conduct Authority (FCA) has reached an agreement with Affinion International Limited (“Affinion”) and 11 high street banks and credit card issuers, following voluntary negotiations, that will pave the way for customers to claim compensation if they have concerns about the way that card security products with the following product names were sold to them:

  • Card Protection
  • Sentinel
  • Sentinel Gold
  • Sentinel Protection
  • Sentinel Excel
  • Safe and Secure Plus

While an agreement has been reached with the FCA on the nature of the proposed compensation scheme (the "Scheme"), it must be voted on by eligible customers (who are the Scheme’s creditors) and formally approved by the High Court before compensation can be paid. A majority of customers who vote will need to do so in favour of the Scheme for this to happen. This means compensation is expected to be paid later this year.

The Scheme is being proposed following collaborative discussions between the FCA, Affinion and the banks and credit card issuers, about how to resolve these issues.

Tracey McDermott, director of supervision and authorisations at the FCA, commented:

“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.” 

Approximately two million customers will receive an initial letter from a company called “AI Scheme Limited” giving more information about the process. AI Scheme Ltd has been set up to promote and deliver the Scheme.

The total amount of compensation paid out will depend on how many eligible customers decide that they wish to claim compensation and the length of time they held the product. The average annual cost of the card security product was £25. 

One of the features of the card security products was insurance to cover fraudulent use if a card was lost or stolen. This was unnecessary because the customer’s card issuer was typically responsible for any transactions after the cards were reported as being lost or stolen and, in the period before reporting the matter, customers were only liable for unauthorised transactions in limited circumstances. The bank or card issuer usually covered customers for anything over the first £50 if transactions took place before the card was reported missing. 

The FCA has not conducted a formal investigation in this matter. Affinion and the following high street banks and credit card issuers have voluntarily agreed to be part of the Scheme and will provide the money needed to fund compensation payments:

  • 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

Key information for Affinion customers

  • Eligible customers will be contacted by AI Scheme Limited from late January 2015 onwards.  The letters will explain in more detail how the Scheme works and what people can do next.  A letter in April or May 2015 will include an invitation for those eligible customers to vote for or against the Scheme and details on how to vote.
  • If the Scheme is approved by voters, all eligible customers, even those who voted against it, will still be able to submit a claim for compensation. If the Scheme is approved, all customers need to do is complete and return a simple claim form and the rest of the process will be automatic. They do not need to use a claims management company to help them make a claim.
  • The Scheme will not cover those who have a card security product as a benefit within a packaged bank account.
  • The Scheme is open to all customers who bought or renewed the card security products between 14 January 2005 (when the FCA began regulating the sale of general insurance products) and August 2013 from Affinion or a bank or a card issuer that is participating in the Scheme.
  • If customers are entitled to compensation under the Scheme they will receive the amount they have paid for their policy since 14 January 2005, less any money paid out by the product and any applicable taxes, plus 8% interest per annum on the amount owed. 
  • Should a customer make a claim, their product will be cancelled – even if their claim is rejected. Existing customers who value the card security product and find its current features useful should therefore think carefully about whether they want to keep the product before they make a claim.    
  • Any complaints referred to the Financial Ombudsman Service will be considered in line with the terms of the Scheme.
  • More information for customers can be found at or by calling 0800 678 1930 (or, from outside the UK, +44 208 475 3103 but calls to this number may incur a charge). The dedicated scheme telephone line will open on 28 January 2015, when people begin to receive their letters.
  • The FCA has published further information for consumers at

Notes to editors

  1. More information about the Scheme can be found on the FCA website.
  2. Affinion’s card security products covered by the Scheme are: Card Protection, Sentinel, Sentinel Gold, Sentinel Protection, Sentinel Excel and Safe and Secure Plus.
  3. The Scheme will not however cover those who have a card security product as a benefit within a packaged bank account.
  4. No FCA enforcement action has been taken against Affinion or any of the banks or credit card issuers. The involvement of the banks and credit card issuers reflects the fact that they either sold Affinion's card security products directly, or introduced customers to Affinion’s card security products. Affinion and these banks and card issuers are participating in the Scheme without any admission of liability of any description on their part.
  5. The Scheme will be carried out by a formal legal process called a "scheme of arrangement”.  A scheme of arrangement is an arrangement between a company and its creditors.  It is governed by Part 26 of the Companies Act 2006.  In order for a scheme of arrangement to be approved a number of steps have to take place.  It must be approved by a majority in number and 75% in value of the Scheme creditors that vote.  It must then be approved by the High Court of England and Wales and a copy of the High Court’s approval must be registered at the Registrar of Companies. 
  6. The FCA has used its powers to bind the Financial Ombudsman Service (FOS) to the Scheme. This means that consumers who are eligible for the Scheme can complain to the FOS, but the FOS can only assess their claims, and award compensation by using the rules of the Scheme. Therefore, consumers who complain to the FOS should be put in the same position as if they had made a claim through the Scheme.
  7. We have added variations of requirements to the permissions of Affinion and the 11 business partners listed in the press statement.
  8. On 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  9. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  10. You can find more information about the FCA, as well as how it is different to the PRA, on our website.