Millions of consumers have been left out of pocket by mis-sold card and identity protection insurance policies, and now the Financial Conduct Authority (FCA) has asked affected policyholders to vote on a proposed compensation scheme to redress the issue.
Card and identity protection policies were sold to consumers either through their bank, card issuer or directly from insurance company Card Protection Plan Limited (CPP), but the FCA uncovered widespread mis-selling where consumers were given unclear and misleading information about the products.
They were often sold when a customer called their bank or card issuer to register or activate a credit or debit card, with policyholders paying an average of £30/year for card protection and £80/year for identity protection. Last year CPP was fined £10.5 million for its involvement in the mis-selling scandal, but now it's time for consumers to get their money back.
Thirteen banks, as well as CPP, have signed up to the redress scheme which could result in hundreds of pounds in compensation for each affected individual. £1.3 billion has been put aside for it, with the amount each policyholder could receive (if the scheme is approved) varying depending on the policies held and how long they've had them for.
Before compensation can be awarded, the following steps need to be completed:
Under the proposed scheme, those who are entitled to compensation will have any premiums paid since 14 January 2005 returned in full (less any sums paid out under the policy) plus interest.
Seven million policyholders will receive a letter over the next few weeks which will explain the steps and the proposed scheme in more detail, and will also include an invitation to vote. If you're one of them it's recommended that you complete and return the voting form by post as soon as possible, but no later than 3 January 2014.
If you think you've got a card or identity protection policy from CPP but haven't received a voting form by the end of November you should contact CPP directly, by calling their helpline on 0800 083 4393.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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