Deadline to apply for compensation is looming.
Millions of people that were sold card protection and/or identity theft insurance through Card Protection Plan (CPP) Group are entitled to compensation.
But time is running out to make a claim.
Those eligible for a share of the £1.3 million redress fund put aside by banks, credit card companies and CPP must submit their forms before Saturday 30th August.
Letters containing claim forms were sent out to seven million people thought to have been impacted in February. However, just under a quarter have submitted their claim so far, meaning five million stand to lose out.
CPP mis-selling
Back in November 2012 CPP was fined £10.5 million, by the FCA’s predecessor the Financial Services Authority, for the widespread mis-selling of its card protection and identity theft insurance products.
Between January 2005 and March 2011 4.4 million policies were sold while a further 18.7 million policies were renewed. While CPP sold these products direct it also had help from high street banks and credit card firms.
New debit and credit cards were issued with stickers which had a number to call to ‘activate’ the card. But this went straight through to a CPP sales team.
Many were persuaded to spend around £30 a year to insure their card against fraud, protection already offered by banks and credit card providers free of charge.
CPP’s identity theft protection policy, which cost around £80, was also pushed on callers. While this policy could help some the FSA ruled CPP ‘greatly exaggerated’ the risks during the sales process.
The insurance products were known by a number of names, depending on who was selling them. Here’s a full list:
- Card Guard (offered by HSBC)
- Card Safe (offered by M&S Money)
- Barclaycard Card Protection
- Barclays Cardholder Protection
- NatWest Card Protection
- Egg Emergency Cover
- Card Protection, Card Protection Plus and Commercial Card Protection (which were sold by CPP and a number of its business partners)
Compensation agreement
In August 2013 a £1.3 billion compensation scheme was agreed by CPP along with the 13 banks and credit card firms involved including:
- Bank of Scotland Plc
- Barclays Bank Plc
- Canada Square Operations Limited (formerly Egg Banking Plc)
- Capital One (Europe) Plc
- Clydesdale Bank Plc
- Home Retail Group Insurance Services Limited (which owns brands including Argos)
- HSBC Bank Plc
- MBNA Limited
- Morgan Stanley Bank International Limited
- Nationwide Building Society
- Santander UK Plc
- Royal Bank of Scotland Plc
- Tesco Personal Finance Plc
CPP customers were invited to vote on how they wanted to receive compensation and many agreed on a claim form with a deadline of 30th August 2014.
In February 2014 letters containing these forms were sent out to the seven million eligible for compensation, but so far less than two million have been sent back.
How much can you get
The compensation scheme covers sales and renewals of policies dating back to 14th January 2005.
Exactly how much you get depends on which products you have or have held and for how long, but pay-outs will include 8% interest.
The FCA says so far successful claimants are receiving £188 on average.
How to claim compensation
If you haven’t completed the form you were sent you need to get a move on and send it off so that it reaches the scheme’s administrators before 30th August.
You must post back the original completed form in the pre-paid envelope provided – photocopies will not be accepted.
If you have lost or thrown away your form you can get a replacement by calling the redress scheme’s number 08000 83 43 93 or filling in an online form. But act quickly as time is getting tight.
If you never recieved a form you can do the same, but bear in mind compensation is only available to those with policies that were bought or renewed after 14th January 2005.
If you have a policy from before 14th January 2005, you may still be able to make a claim by contacting the company that sold you the insurance. If it refuses to reimburse you, you could take your claim to the Financial Ombudsman Service. For more read: How to complain to the Financial Ombudsman Service.
Will the deadline be extended?
There have been calls for the redress scheme deadline to be extended, but as yet the scheme's administrator - Ernst and Young - has not budged and is sticking to the agreed date.
As it stands if the claim form is not received by 30th August 2014 you will lose your right to redress and the money will be paid back to CPP, banks and credit card companies.
However, if you believe your compensation claim was not handled correctly under the scheme, you would be able to complain to the Financial Ombudsman Service.
More on your rights and compensation:
How to claim your PPI compensation
How to complain to the Financial Ombudsman Service
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Landmark court ruling could allow more flight delay compensation claims
Claim compensation for pothole damage to your car, bike or motorcycle