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Mis-sold insurance redress package 22/08/2013 The FCA has announced an agreement that should pave the way for redress for customers who were mis-sold particular types of card protection and identity protection policies.

Mis-sold insurance redress package

The Financial Conduct Authority (FCA) has announced that it has agreed a redress package that should pave the way for redress to be paid to customers who were mis-sold particular types of card protection and identity protection policies.

The agreement is with a company known as Card Protection Plan Limited (CPP) and 13 high street banks and credit card issuers.

Seven million customers, who between them bought and renewed about 23 million policies, will soon receive a letter from CPP giving more information on the process. The redress bill could be up to £1.3bn with redress per customer depending on the type of policy (or policies) owned and the length of time it was held. 

In November 2012 the FCA’s predecessor, the Financial Services Authority (FSA), fined CPP £10.5 million for mis-selling the products.

The key failings identified were:

  • CPP sold its Card Protection product by emphasising that customers would benefit from up to £100,000 worth of insurance cover - when this was not needed because customers were already covered by their banks; and
  • CPP overstated the risks and consequences of identity theft during sales of its Identity Protection product.

According to the FCA, the involvement of the banks and credit card issuers reflects the fact that they introduced customers to CPP’s products and so must share responsibility for putting things right.
 

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