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CPP card protection compensation scheme agreed

23 August 2013

Customers who bought credit card payment insurance from CPP (Card Protection Plan Ltd) are in line for compensation payments for mis-selling, following an agreement reached by the Financial Conduct Authority with CPP and 13 card issuers.

CPP was fined £10.5m by the FCA last November for long term mis-selling of card protection and identity protection insurance. Customers were given misleading and unclear information about the policies so that they bought cover that either was not needed, or to cover risks that had been greatly exaggerated.

As well as CPP selling directly to customers, high street banks and credit card issuers introduced millions of customers to CPP. Some card issuers required customers to phone CPP to activate their cards, at which point CPP would attempt to sell the insurance cover.

Bank of Scotland, The Royal Bank of Scotland and Clydesdale Bank are among the signatories to the deal, which potentially affects 7,000,000 customers, who between them bought and renewed about 23,000,000 policies. Up to £1.3bn could ultimately be paid out, redress per customer depending on the type of policy (or policies) owned and the length of time it was held.

The deal involves a scheme of arrangement which is subject to the approval of the High Court in London. Customers, as creditors under the scheme, will have to vote on the scheme, a majority of those voting being necessary for approval to be given. Those who vote against will still qualify for payments if the scheme is approved.

This means that payouts are not expected to begin until spring 2014. Letters to customers advising of the process will be sent out from the end of this month, followed by a further letter in the autumn inviting people to vote. There will also be a newspaper advertising campaign.

Other banks and card issuers that have agreed to pay into the scheme are Barclays, Canada Square Operations (formerly Egg Banking plc), Capital One (Europe) Plc, Home Retail Group Insurance Services, HSBC Bank, MBNA Ltd, Morgan Stanley Bank International Limited, Nationwide Building Society, Santander UK and Tesco Personal Finance.


FCA said their involvement reflected the fact that they introduced customers to CPP’s products and so had to share responsibility for putting things right.

Martin Wheatley, FCA chief executive, commented: “We have been encouraged that, working closely with the FCA and despite their different business needs, a large number of firms have voluntarily come together to create a redress scheme that will provide a fair outcome for customers. This kind of collaborative and responsible approach is a good example of how firms are taking more responsibility and helping – step by step – to rebuild trust.

“We believe this will be a good outcome for customers who may have been mis-sold the card and identity protection policies. Subject to CPP’s customers approving the scheme, these policyholders will be able to claim a full refund of premiums with interest.

“Doing it this way means customers will get redress via a simple and standardised process, so we are encouraging customers to approve the Scheme when they receive their voting letters in the autumn."

The FCA also pointed out that customers will only need to complete a simple claim form, and will not need to use a claims management company.

The scheme is open to all customers who bought or renewed the card protection product since 14 January 2005 (when the FCA began regulating the sale of general insurance products) from CPP, a bank or a card issuer who are participating in the scheme; and customers who bought or renewed identity protection from CPP since 14 January 2005 by phone.

Further information is on the FCA website.

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