CPP to pay out £14.5m: is some of it yours?

neil hawkins
By Neil Hawkins

cpp mis-sold id protection

ONE of the largest fines ever handed out to a retail company by the Financial Services Authority (FSA) has given hope to thousands of consumers who were mis-sold protection from identity theft and card fraud.

The FSA investigation found that Card Protection Plan Limited (CPP) offered insurance of up to £100,000 against fraud which was already covered by banks and that it "overstated the risks associated with identity theft" when trying to persuade customers to purchase its ID Protection product.

Those affected by the mis-selling scandal could be in line for a refund of any premiums paid, plus a likely 8% interest.

CPP, which sold its products directly and through the major high street banks, has set aside a further £14.5 million to cover redress but this only covers customers it handled directly.

The vast majority of CPP's revenue was via high street banks, who directed customers to CPP call centres via stickers on new credit or debit cards.

The final bill for compensation could run into hundreds of millions of pounds.

Who's affected and eligible for repayment?

Mis-sold?
  • overstated threat of ID theft
  • overstated liability
  • pushy sellers

Customers sold policies by CPP directly will be sent a letter by the firm telling them how to make a claim.

Many people bought a policy when they got a new card and called to activate it so it may be worth them checking bank statements around the time a new card was issued.

Fraud protection was usually sold for £35 for a year. Identity theft protection was more expensive, usually around £80 for the year.

Together, then, the two products cost consumers nearly £120 a year and, like PPI, the policies may have been renewed annually so the total compensation could be many hundreds of pounds for some CPP customers.

Customers of the high street banks - including Nationwide, RBS/Natwest, HSBC, Barclays and Santander - will have to wait and see whether they'll get any compensation, however, as the FSA are still in talks about how the claims should proceed.

It is hoped that, again as with the PPI mis-selling scandal, banks will write to their customers to inform them that they may have been mis-sold ID protection and advise on what next steps to take.

Identity crisis

Despite the fact that the FSA started looking into CPP in December 2011, it's not yet clear whether other, similar identity theft protection products offered by the high street banks will result in repayments for mis-selling.

However, products sold to protect against identity theft and fraud with a similar focus on insurance will come under close scrutiny from the FSA.

In this case the FSA investigation looked at what CPP termed "significant historic failings" at the company between January 2005 and March 2011.

CPP sales teams overemphasised the benefits of insurance against ID theft and fraudulent transaction to callers who were ringing to activate new debit or credit cards from their banks.

As our full guide points out, in most cases identity theft insurance is not needed, as banks will provide cover for consumers in most circumstances.

Consumers are not normally liable for fraudulent or unauthorised transactions.

The FSA also found that CPP staff persisted with sales after callers had turned down the purchase and took payments from its customers each year without reminders or renewal letters.

Paul Stobart, CPP Chief Executive Officer said, "We are deeply sorry for the errors and wrongdoings of the past and are paying a heavy penalty through what is a large fine."

Comments

1
19 February 2014
kebab

I have had a couple of letters but have no idea of any insurance I may have had as the letter gives no details.

2
18 February 2014
Stuart Howells

Dave D.
I have received more paper (claim forms) from CPP, it's very obvious they are trying to confuse customers into filling in with the wrong answers, and then deciding themselves who was missold.
We were all missold, so why don't they repay everyone's premiums with interest.

3
6 April 2013
Helen O

I cancelled my CPP card protection last month. I am waiting to hear from CPP about a claim for compensation after the FSA ruling. I have had no communication from them.

Does anybody know when we will hear from them?

4
4 February 2013
L Harris

I've just had a letter stating the CPP insurance on my card is due, I have rung them up cancelling the policy. I've had this for years, how do I claim for miss selling as I was sold the original cover over the phone by being told that my cards were at risk.

30 September 2013
Dimpster3

Hi, I also had CPP for many years. Payment was due in January so I cancelled the policy with plenty of notice, received an email back stating the policy was cancelled but they still took a payment from my bank 3 months later. Will definitely be claiming back as soon as I can.


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