Mis-selling: Are YOU entitled to compensation?

Seven million people who have been mis-sold card or identity protection policies will receive letters in the next few days asking them to approve a compensation scheme which could result in payouts totalling £1.3 billion.

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The Financial Conduct Authority (FCA) is sending out letters from today (November 11) inviting those affected to vote on whether or not they agree with a compensation scheme that that it has developed with 13 banks and credit card issuers and the insurer CPP.

Anyone who was sold a card or identity protection policy direct by CPP or by their bank or credit card provider could be in line for a payout.

The FCA is advising consumers to steer clear of companies offering to resolve claims on consumers’ behalf in return for a fee.

This kind of policy was usually sold to customers when they called to register or activate a credit or debit card, but often consumers weren’t given all the relevant information they should have been, or the information they were given was misleading or unclear.

CPP has already been fined £10.5m for mis-selling this kind of product, and has agreed it will no longer offer this type of protection policy to new customers. 

Banks and credit card providers in the scheme

The following 13 banks and credit card providers are all in the compensation scheme.

• 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

Who’s eligible

You’re likely to be eligible for compensation if you weren’t given all the facts when you were sold your card and/or identity protection policy, or the information you were given was misleading or unclear.

Compensation voting forms must be sent it back no later than 5pm on January 3, 2014. If you miss this deadline you can submit it in person at the creditors’ meeting in London on January 7, 2014.

If you think you have a card and/or identity protection policy from CPP and you have not received the voting form by the end of November 2013, you should contact CPP on 0800 083 4393.

If you don’t want to vote, your current policy won’t be affected, and you should still be able to claim compensation, provided the scheme is still approved. However, the scheme can’t go ahead unless it is approved, so you shouldn’t waste your vote.

A majority of policyholders that vote, and 75% in value of those that vote, have to vote in favour of the scheme for it to be approved. Provided the majority of customers votes in favour of the compensation scheme, it will then be submitted to the High Court for final approval. This Court hearing is due to take place on January 14, 2014.

If the scheme is signed off by the High Court, eligible policyholders will be sent claim forms from February 2014, with more details on how to submit their claims.

If you qualify for compensation, then you will get any premiums you’ve paid since January 14, 2005 returned to you, less any claims you’ve made under the policy, plus 8% interest. This date has been chosen because it was when this kind of insurance product first started being regulated.

You can learn more about the compensation scheme from the scheme helpline on 0800 083 4393 (outside the UK dial +44 1144 520 800) or on the scheme website: www.cppredressscheme.co.uk.

Remember – as is the case with payment protection insurance, claiming compensation for mis-selling will be a straightforward process you will be able to handle yourself. We strongly agree with the regulator that you should NOT engage the services of a firm to make your compensation claim for you, as they will take a substantial amount of any money you are due as a fee.

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