Seven million people who bought Card Protection and/or Identity Protection products from Card Protection Plan Limited (CPP) or from their bank or card provider can start claiming compensation from mid-February, the Financial Conduct Authority (FCA) announced today.
Clive Adamson, director of supervision, said:
“If you believe you were mis-sold one of these protection products, fill out and return the claim form to make sure you get your money back. Don’t put it off till the last minute.
“The FCA has worked closely with CPP, the banks and card providers to set up this consumer redress scheme. This is an important example of firms voluntarily coming together to meet our expectation that consumers get a fair deal.”
Claims forms will be sent to eligible customers during February 2014, and must be returned by 30th August 2014, with the first compensation payments expected to be made from late March 2014. The total redress bill could be up to £1.3 billion.
Redress per person will depend on the length of time the customer had the product. Card Protection cost about £30 a year, while Identity Protection cost about £80 a year. This consumer redress scheme covers sales and renewals of these CPP products since January 2005.
In line with our objective to provide an appropriate degree of protection for consumers, we have updated our website to explain what customers should expect and what they need to do.
- Claim forms will be sent to customers by post during February 2014. Customers who had both products will receive two forms.
- Customers do not need to use the services of a claims management company or law firm to complete the claim form.
- Customers should complete all sections of the original claim form, sign and date it and return it in the envelope provided by CPP. Photocopies of the scheme claim forms and scheme claims sent in the form of letters will not be accepted
- Current policyholders should think carefully about whether they want to keep the benefits and the protection that their policy provides. Anyone who makes a claim will have their existing policy cancelled.
- Customers who either voted against this consumer redress scheme, or did not vote at all, will still receive a form and are entitled to claim compensation.
- If customers think that they have a card protection and/or identity protection policy, and have not been contacted by the end of February, they should call the dedicated customer helpline on 0800 083 4393 (outside the UK dial +44 1144 520 800).
1.3 million policyholders voted after they received voting forms late last year, 98% of whom voted in favour of it. The High Court approved the scheme on 14 January 2014, and it became effective on 31 January 2014. No scheme claims will be considered after 30 August 2014.
In November 2012, CPP was fined £10.5 million for widespread mis-selling of its Card Protection and Identity Protection policies and ordered to pay consumer redress. Since then the FCA has been working closely with CPP and 13 banks and card issuers on a proposal that offers the best outcome for the largest number of customers. This resulted in the proposed consumer redress scheme being announced in August 2013. Policyholders were then contacted and asked to vote on whether to adopt a scheme of arrangement under the Companies Act 2006 as the redress vehicle.
Notes for editors
CPP 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 pay redress:
- 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
- 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 a Court, and requires the consent of a majority of creditors (by number) and 75% by value of creditors that vote. The estimated maximum redress bill of £1.3bn is based on total sales and renewals covered by the Scheme. However, the actual amount of redress paid out will depend on the number of valid claims received, and the extent to which existing customers value the benefits from the product.
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 though the Scheme.
- On 1 April 2013 the Financial Conduct Authority (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).
- 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.
- Find out more information about the FCA.