CPP fined £10.5 million for mis-selling credit card insurance
The FSA has punished Card Protection Plan Limited for mis-selling identity theft and card protection insurance products to credit and debit card holders. Did you have a policy? You may be due compensation.
The Financial Services Authority (FSA) has issued its joint largest retail fine, totalling £10.5 million, to card protection company Card Protection Plan Limited (CPP).
The fine has been imposed due to the discovery of widespread mis-selling relating to two CPP insurance products, sold between January 2005 and March 2011.
The CPP agreed to settle early meaning it got a 30% discount and escaped a larger £15 million fine.
What the FSA found
The FSA found that CPP misled customers into believing they needed enhanced Card Protection insurance even though credit and debit card holders are already generally protected for unauthorised use free-of-charge.
CPP was also found guilty of scaring customers by overplaying the risks and consequences of identity theft when selling its Identity Protection product.
Furthermore, CPP’s sales practices were found to be unacceptable. This was because they were focused on aggressive, persistent methods of convincing customers to buy products, had targets for dissuading customers who wanted to cancel, renewed payments without reminders in some instances and failed to stop agents telling customers to buy on the basis that they could cancel in the cooling-off period.
There was also a discovery that CPP used an unfair term in its contracts that allowed the company to take payments from another card covered by Card Protection should the original card covered fail to make it. The multi-card registration was meant to ensure all cards were protected but was wrongly used to take payments instead.
Tracey McDermott, the FSA's director of enforcement and financial crime said that this was a ‘serious case’ prompting the joint largest fine ever issued. Apart from the poor practices the FSA also revealed that CPP had been warned repreatedly that it might be mis-leading customers between 2005 and 2011 which CPP took little or no action to rectify.
You can read more about the findings here.
How it happened
Card Protection and Identity Protection was sold directly through CPP’s own sales channels as well as through partners like high street banks.
The banks collaborated with CPP by putting a sticker with the company’s number on the front of cards to get them 'activated', but which actually took you through to a CPP sales team.
Despite the role banks have played in this scandal and the proportion of money they got paid for assisting, they have managed to escape a fine from the FSA.
The cost
Card Protection was sold for £35 a year while Identity Protection cost nearer £84 a year. Overall CPP sold 4.4 million policies making £188.3 million from customer payments.
But the renewals, of which there were 18.7 million, generated a much bigger £656.5 million.
Compensation
CPP no longer sells these products and have made various changes to comply with the FSA's findings, but for the millions already affected there will be some redress.
CPP has agreed to set aside a further £14.5 million in a compensation fund for customers that were victims of mis-selling.
The FSA recommends getting in touch with CPP directly if you think you have been mis-sold a policy. You can try their direct sales line on 01904 544500.
We are waiting to hear back from the CPP about a more defined process to deal with the millions expected to claim.
We will update this article when we hear more.
Let us know
Think you have been a victim of this latest mis-selling scandal? Tell us about your experiences in the comment boxes below.
More on mis-selling:
How to claim your PPI compensation
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Comments
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I contacted Barclays recently about this. They in turn wrote to Sentinel and said I should settle the matter with them. I then received a letter from CPP stating that I had never had a PPI policy with them. I responded by phone at first and was sent from pillar to post. Both calls were pointless, neither operator would discuss the issue without an account no. I explained I was baffled because it was a Card protection policy and Barclays had the details. I have another letter to respond to which reads much like the first. It's frustrating. No one seems to know what's going on. Do I go back to Barclays?
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I was paying out an amount of approximately £7 per month as a separate account which was linked to my Sainsbury's Bank Credit Card. I didn't even understand what was happening or couldn't account for this sum of money. I called up sainsbury's bank and they told me to call the insurance company.I did so and had the insurance policy cancelled. Neither Sainsbury's Bank nor the insurance company wanted to take liability. Nothing came of it. I called the number that you gave, but there is no indication that CPP wants to be contacted re insurance claim. On the other hand, I think you need to flag up the extortionate amount claim companies are charging to claim PPI. People do not realise that they only use a stamp and envelope and then take 30% of what is offered to the recepients.
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I remember having one of these policies (althoug I don't think i have the paperwork anymore).I cancelled the policy or so I thought and they didn't cancel it so I actually closed my account that it was coming out of and they just money from another card registered with them. When I complained they said they hadn't known I wanted to cancel and were allowed to take payment from any of the cards registered if the original payment was cancelled.
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06 February 2014