Consumer redress scheme opens – card security product holders have until March 2016 to claim compensation

Approximately two million people who bought card security products with one of the product names listed below can start claiming compensation from late-August, the Financial Conduct Authority (FCA) announced today.

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

The card security product costs about £25 a year. The amount of compensation paid will depend on the length of time the customer had the product. The first compensation payments are expected to be made from late September 2015.

The consumer redress scheme covers sales and renewals of the card security products since January 2005. A separate company “AI Scheme Limited” has been set up to deliver the consumer redress scheme on behalf of Affinion International Limited and the banks and card providers.

What product holders should do next

Compensation claim forms will be sent to eligible product holders during August and September 2015, and the original compensation claim form must be returned by no later than 18 March 2016 to be considered for compensation.

In line with our objective to provide an appropriate degree of protection for consumers, we have updated our website to explain what product holders should expect and what they need to do.

  1. Compensation claim forms will be sent to product holders by post during August and September 2015.
  2. Product holders do not need to use the services of a claims management company or law firm to complete the compensation claim form.
  3. Product holders should complete all relevant sections of the compensation claim form, sign and date it and return the original form in the envelope provided by AI Scheme Limited. They should not return a photocopy of the form as their claim will be rejected.
  4. Current product holders should think carefully about whether they want to keep the benefits and the protection that their product provides. Anyone who makes a compensation claim will have their existing product cancelled.
  5. Product holders who either voted against this consumer redress scheme, or did not vote at all, will still receive a compensation claim form and are entitled to claim compensation.
  6. If customers think that they hold one of the products included in the scheme, and have not been contacted by the end of September 2015, they should call the AI Scheme helpline on 0800 678 1930 (outside the UK dial +44 208 475 3103).

Linda Woodall, Director of Supervision - Retail & Authorisations, said:

“The FCA has worked closely with Affinion International Limited, and banks and card providers, to set up this consumer redress scheme. We have tried to make it as straightforward as possible. The “AI Scheme” is genuine and the only way to claim compensation is by using the claim form sent in the post to affected product holders.”

“If affected product holders have concerns about the way their card security product was sold to them, they should complete and return the original “AI Scheme” compensation claim form received in the post to claim their money back. Anyone who receives a compensation claim form and wishes to claim compensation should do so straight away and not wait until the end of the seven month claim period."

At the AI Scheme creditors’ meeting held on 30 June 2015, nearly 99% of voters supported the AI Scheme. The High Court approved the AI Scheme on 9 July 2015, and its effective date is 17 August 2015. No AI Scheme compensation claims will be considered after 18 March 2016, other than in limited exceptional circumstances.

Notes to editors

  1. One of the features of the card security products was insurance to cover fraudulent use if a card was lost or stolen. This was in certain respects unnecessary because the customer’s bank or card issuer was typically responsible for any transactions after the cards were reported as lost or stolen and, 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 AI Scheme has also been designed to deal with any other concerns that product holders may have with the way in which a card security product was sold to them.
  2. The FCA has not conducted a formal investigation into this matter. Affinion and the following high street banks and credit card issuers have voluntarily agreed to be part of the AI Scheme and will provide the required funding for the 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
  3. A Scheme of Arrangement (“Scheme”) is an arrangement between a company and its creditors and can help with the re-organisation of a company’s finances. The Scheme has to be approved by the High Court, and requires the consent of a majority of creditors (by number) and 75% by value of creditors that vote.
  4. The total amount of compensation paid under the AI Scheme will depend on the number of valid claims received, and the extent to which existing product holders value the benefits from the product.
  5. The FCA has used its powers to bind the Financial Ombudsman Service (FOS) to the AI 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 though the Scheme.
  6. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA). On 1 April 2014, the FCA took over responsibility for consumer credit regulation.
  7. 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.
  8. Find out more information about the FCA.