Have you been mis-sold ID fraud protection cover by CPP? You should be receiving a letter spelling out what happens next.
If you’ve been sold identity theft protection or a card protection policy by CPP, you could be in line for compensation. Last week the financial regulator, the Financial Conduct Authority (FCA) said that 13 banks and CPP would pay out up to £1.3 billion in compensation to approximately seven million people who could have been mis-sold ID theft protection and/or card protection policies. CPP is going to start writing to people from 29th August. This article explains what will happen
UPDATE: I've written a more up-to-date article explaining what happens if you've received a letter from CPP or if you haven't yet received one. You can read this article on CPP - what happens next, by clicking the orange link.
Q. Who will be compensating people who’ve been mis-sold?
A. The FCA says that banks and CPP have agreed to set up a fund to pay compensation. CPP did the selling/mis-selling of these policies, but the banks have agreed to pay into the compensation pot because bank and credit card customers were sold ID and card protection policies when they rang a number to activate their card. If the banks hadn’t set up this (money making) system, their own customers wouldn’t have been mis-sold.
Q. Was my bank involved?
A. In all, 13 banks and card issuers will be paying into the compensation fund. If you bought card protection or ID theft protection and you’re a customer of these banks or credit card providers, you could be in line for compensation. They are:
• Bank of Scotland (part of Lloyds Banking Group)
• Barclays Bank
• Canada Square Operations Limited (formerly Egg)
• Capital One (Europe)
• Clydesdale Bank (part of National Australia Group Europe)
• Home Retail Group Insurance Services
• HSBC Bank
• Morgan Stanley Bank International
• Nationwide Building Society
• Royal Bank of Scotland
• Tesco Personal Finance
Q. How much will I get?
A. The average payouts will be around £200, but you could get more or less than this. You will receive a refund of the premiums you paid after January 15th 2005, plus interest at 8%, worked out on a ‘simple’ basis (which means you don’t earn interest on interest).
Q. How do I know if I was mis-sold?
A. If you bought one of these policies, until the time that CPP changed the way it sold them, I believe it’s quite likely many people who took out ID fraud protection policies over the phone were mis-sold. The reason is that they were aggressively sold and didn’t provide much in the way of benefits on top of those you’d already receive by law. Of your premiums only a percentage went to provide the benefits. A big chunk of it went in commission. If you have a card protection policy, the regulator is taking the view that you would have been mis-sold because the policy itself was flawed.
So, my advice is that if you bought or renewed a card protection policy or ID fraud policy after January 14th 2005, which is when the last regulator the FSA started regulating the sale of these policies, you should consider putting in a claim for mis-selling, unless you were completely clear about the benefits and didn't feel pressured into taking the policy out.
Q. When will I receive a letter?
A. CPP has set up a special CPP redress scheme website, and will start sending out letters from tomorrow (29th August) and says all will have been sent out by September 16th. On its redress scheme website, it initially said that if you haven’t received a letter a week later (so, approximately September 24th) it probably means that you’re not eligible for compensation. I said at the time that I believed this was wrong and contacted the Financial Conduct Authority (as did at least one other journalist I know of). CPP's website has now been changed. Click this link to read what it says in relation to people who don't get a letter.
SAVVY TIP: At risk of repeating myself, don’t assume that because you haven’t had a letter from CPP, you aren’t entitled to compensation. These policies were, in many cases, barely worth the paper they were printed on so get in touch with CPP if you were sold one after January 2005.
Q. Do I have to do anything else?
A. You’ll receive a second letter three months after the first one has been sent out at the end of August - so you should receive it at the end of November.
Q. How do I get in touch with CPP?
A. You can call them on 08000 834393, or 01144 520800 if you're calling from abroad or a mobile.
Q. When will I get compensation?
A. You won’t receive compensation until early next year (date to be finalised) because the compensation scheme has to be voted on.
Q. Who votes on the compensation and how do I go about it?
A. Anyone entitled to compensation will have a vote on whether or not the scheme should go ahead. A majority of people who vote will have to vote in favour of it so do vote ‘yes’ if you receive a letter. If the customers vote in favour of it, the High Court will then have to approve the scheme before compensation can be paid.
You can read the FCA's Consumer information on CPP compensation on their website and a document on CPP's website that explains the terms of its new funding - including information that seems to be saying that they don't expect more than 25% of potential claimants to claim compensation.
Five steps to take if you're the victim of ID fraud
How to keep your accounts safe and what to do if your email address is hacked
10 scams to avoid
Bank fraud refunds - will your bank always give you your money back?
SavvyWoman email newsletters: If you found this information useful why not sign up now to receive free fortnightly email newsletters with money saving tips and help? You can sign up at the top of any page on the website and your details won’t be passed to any other company for marketing purposes.
SAVVY HELP: Why not ask Savvywoman's panel of experts a question about your finances by clicking here? The answer will be displayed on the website but your surname will never be used.