Card protection compensation set to hit £1.3bn
CARD Protection Plan (CPP) redress payments could total up to £1.3bn as customers who bought card or identity protection are encouraged to claim compensation for mis-selling.
The Financial Conduct Authority (FCA) yesterday launched the scheme for those who bought or renewed the products from CPP or their bank or card provider from January 2005 onwards.
Around 7m will be eligible for the payout, with forms due to be sent out next month and a deadline of August set for their return. Compensation payments will be paid from March next year.
The FCA said redress will depend on the length of time a customer held the protection and the costs they paid. Card protection cost about £30 a year, while identity protection cost about £80 a year.
In November 2012 CPP was fined £10.5m for widespread mis-selling of the policies and was ordered to pay redress to customers.
Since then the FCA has worked with CPP and 13 banks and card issuers to find a solution. It proposed the compensation scheme last August and 98 per cent of the policyholders it contacted voted in favour.
Yesterday Clive Adamson, the FCA’s director of supervision, warned policyholders not to leave their claim too late.
“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.”
After the rash of firms mediating in Payment Protection Insurance (PPI) claims, the FCA stressed that customers could fill out CPP forms themselves, but also warned that claimants’ policies will be cancelled.