Credit card protection mis-selling: how to claim your compensation

People who were sold credit card protection and identity theft insurance policies are entitled to compensation

For many years, journalists with extensive insurance backgrounds, such as myself, have been warning about two over-priced insurance products, which offer little or nothing more than your basic protections under the law.

Card protection insurance and identity theft protection are supposed to protect you if your card is lost or stolen, or if your identity is stolen. Both insurance products are typically sold with debit or credit cards for between £20 and £100 per year. It could total hundreds of pounds if you have renewed the cover every year.

In addition to offering little of value, insurers also overstated the risks of not having the insurance – although that's what insurers do with most types of insurance, at least to some extent. They've got products to sell after all!

Considering the flaws in those two insurance products, it's no surprise that the financial regulator is forcing the high-street banks and their card insurer of choice, CPP Group, to compensate anyone who complains. The banks included are:

• Bank of Scotland
• Barclays Bank
• Canada Square Operations Limited (formerly Egg)
• Capital One (Europe)
• Clydesdale Bank
• Home Retail Group Insurance Services
• HSBC
• MBNA
• Morgan Stanley Bank International
• Nationwide Building Society
• Santander UK
• The Royal Bank of Scotland
• Tesco Personal Finance

Lloyds TSB and Halifax are excluded, because they did not sell the insurance.

The insurer's failures have been so terrible that you probably won't even need to prove it was mis-sold to you. Instead, anyone with a policy will receive a letter from CPP Group stating what to do to get your compensation. You might already have received one.

In the letter, all customers will be instructed to vote to agree on receiving compensation in this way, but it shouldn't be difficult to secure a majority of votes! You'll then get another letter with a claim form that you'll need to return by the deadline specified therein.

We might expect claims companies to sell their services to help you get your money back, but the regulator makes it clear: “You will not have to use and pay a company to claim compensation on your behalf.”

You should get your money back next year, but probably no earlier than spring, assuming the banks and CPP can get their act together to refund tens of millions of policies by the end of 2014. It seems like a big ask to me.

In addition to getting your premiums back, you'll get a little bit of interest on top, but if you've claimed on your policy then any direct costs of handling the claim will be deducted.

If your policy is from before 2005

Unfortunately, this only applies to those who took out or renewed the insurance from 2005 onwards. But you could still get your money back for earlier policies and it's easy to go through that process by yourself.

To do this, you should write a complaint letter to the bank who sold you the insurance, pointing out that it was obviously flawed based on the agreement the FCA has reached recently with the high-street banks and CPP. If it refuses to reimburse you, you can then complain to the Financial Ombudsman Service.

Normally the Ombudsman doesn't deal with cases this old, but it should do if it believes you when you say you only recently learned that you had cause to complain. Since the regulator has only now reported on the scandal, I think the Ombudsman will agree you fit the bill. Read How to complain to the Financial Ombudsman Service.

If you find writing the complaint letter to your bank a bit tricky or would like help with the Ombudsman's complaint form, you might ask for free help at a Citizens Advice Bureau. It's better than using a claims company, which will charge you for their help.

More on consumer rights:

CPP card protection and ID insurance mis-selling compensation deal announced

Bank of Scotland fined £75,000 for repeated fax blunder

How to claim your PPI compensation

How to complain to the Financial Ombudsman Service