Consumers asked to vote on
mis-sold insurance compensation
By Marianne Curphey
If you were mis-sold certain types of insurance with your credit cards, you may be eligible for compensation - but first you'll be asked to vote on the compensation package being considered.
This spring, you will hear from the Financial Conduct Authority (FCA) if you bought card protection or identity protection services from a company called Card Protection Plan Limited between 14 Jan. 2005 and August 2014. The plans provided protections that were already covered under the terms and conditions of the bank or card provider, such as fraudulent card use policies (fraudulent purchases are already covered by issuers' zero liability policies).
The FCA has already begun writing to credit card customers to inform them about the plan. Some card users may have been unaware that they have grounds for complaint, and the FCA hopes that customers who have yet to make a claim will take action.
The compensation plan is known as a "Scheme of Arrangement". It needs to be approved by more than half of those who were mis-sold insurance
and must represent the votes of those who, as a group, are owed 75% of the value of the scheme, which is estimated to possibly top £400 million.
Tracey McDermott, director of supervision and authorisations at the FCA, said in a January 2015 statement that he encourages anyone who receives a letter in April or May 2015 from Al Scheme Limited, the company set up to promote the scheme, to vote in favour of the scheme.
must be returned by 23 June 2015. If enough customers vote
in favour of the compensation package, there will be a formal hearing in the High Court on 9 July, and then compensation could be paid later in the year -- at the earliest, starting 28 August. If not enough people vote, it won't be able to go ahead.
If, however, the scheme is approved by voters and by the High Court, AI Scheme Limited will write to eligible customers again in August and September 2015 to ask whether they want to be considered for compensation.
The letters will include a compensation claim form that has to be completed, signed and returned to the scheme administrators by 29 Feb. 2016.
The scheme is a voluntary one, agreed to by the banks and card companies. If a majority of customers vote in favour, all customers (even those who voted against it) will be able to send in a claim for compensation.
Who is eligible to vote
The scheme only covers those who bought certain types of insurance policies between January 2005 and August 2013. These policies go by the names of Card Protection, Sentinel, Sentinel Gold, Sentinel Protection, Sentinel Excel and Safe and Secure Plus. The FCA recently came to an agreement with 11 banks and card issuers over these policies and they include Barclays, HSBC, Lloyds, RBS and Affinion.
You are not eligible for compensation if you received insurance as part of a packaged bank account.
It's important to note that these insurance products are different from Payment Protection Insurance (PPI), which was also mis-sold; the compensation scheme for mis-sold PPI was well underway in late 2014.
If you make a successful claim, you could receive the premium for the policy, minus any claims you made and any taxes, plus 8% interest per annum on the amount owed. The average price paid for the policy was £25.
If you make a claim, successful or not, your product will be cancelled.
"It is not necessary to use the help of a claims management company to receive compensation," said Laura Mostaghimi, money adviser at National Debtline. "The FCA is sending out letters which give a step by step guide on what people need to do next. You only need to deal with the FCA and the AI Scheme, and so if someone else contacts you via phone or email, it could be a scam."
If you've already submitted a complaint to the Financial Ombudsman Service regarding the mis-sold insurance, you still need to go through the voting and claims application process and your compensation will be limited to the terms above.)
You can visit the AI Scheme Limited website or call 0800 678 1930 (or, from outside the UK, +44 208 475 3103, but calls to this number may incur a charge). You can also visit the FCA website.
Published: 12 February 2015
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