The Financial Conduct Authority is working with card protection provider Card Protection Plan Ltd, which it slapped with a £10m fine last year, and banks that sold card and identity protection policies, to finalise a redress scheme in what could become the latest bank mis-selling scandal.
Consumers who bought a bard and/or identity protection policy with Card Protection Plan Ltd may be entitled to compensation as the FCA has found widespread mis-selling by the group, the regulator said in a statement.
The FCA found widespread mis-selling by CPP of card protection and identity protection policies, which were often sold to unknowing when customers called to register or activate a debit or credit card.
A plan is now being finalised to compensate customers that were mis-sold a policy they bought directly from CPP, or through a bank or card issuer, the FCA said.
The watchdog said it has “agreed in principle” that a compensation scheme will be set up to do this, but said details of any scheme have not been finalised.
The FCA said: “We are working with CPP and some of the banks and card issuers that sold the protection policies, to finalise an agreement to compensate customers that were mis-sold a policy.
“We have agreed in principle that a compensation scheme will be set up to do this but it has not been finalised.”
CPP already stated last year that it will compensate customers that bought a mis-sold protection policy directly from the firm. If the compensation scheme it is now working on is finalised it would include these customers as well as those that bought a mis-sold policy through a bank or card issuer.
CPP will write to customers affected by mis-selling of the protection policies within the next three months.
Last year the FCA fined CPP £10.5m for mis-selling the insurance policies. CPP agreed to stop selling policies to new customers, other than where it is sold as part of a package, and to stop trying to persuade customers to keep their policy when they want to cancel it.
It also agreed to remove an unfair term in its contracts that it used to take renewal payments from some customers. It has since stopped taking those renewal payments unfairly.
The firm has written to around 46,000 customers affected by that unfair contract term and paid them a total of approximately £3m in compensation. CPP recently contacted a further 25,000 customers to ask whether they think they are also entitled to compensation.
