Banks Hit by CPP Claims Scandal
The already troubled UK banking industry is braced to tackle yet another mis-selling scandal, this time concerning card protection insurance. This product, sold by a company named Card Protection Plan Ltd (CPP) and via 13 of the country’s banks and credit card issuers, has been deemed to have been mis-sold to over seven million customers after an investigation by the Financial Conduct Authority (FCA). The card protection insurance claims scandal is, as things stand, concerned with over 20 million policies, and the total refunded could reach in excess of £1.3billion.
Scheme of Arrangement
After the FCA decided that customers had been mis-sold CPP card protection policies on a regular basis it worked with the companies concerned and they have now come up with a ‘scheme of arrangement’; this is a method of claiming that keeps things simple for the customer, and has been voluntarily agreed by the lenders and issuers involved. CPP Ltd sells policies directly to the public, as well as providing them to banks and lenders. The process has yet to be granted High Court approval, hence payment are expected to begin in the spring of 2014 at the earliest.
Things you should know
Customers who are entitled to make CPP claims should receive a letter after the end of August, 2013, explaining what happens next. It is worth noting that claims will be taken on only for policies purchased since 14th January, 2005, and the repayment will include 8% interest on the amount owed. Furthermore, any customer making CPP claims – even those that are unsuccessful – will have their policy cancelled; it is vital, therefore, that the claimant understands the terms of the deal, as some features included may actually be of use. The CPP scandal follows in the footsteps of the ongoing PPI mis-selling saga which has so far cost the banks over £15billion in repayments.