When I appear
on BBC Breakfast I write a cue and notes of what I am going to say. I never
read it but it is a useful aide memoire for me. And where there are
allegations it ensures I get them right and am fair and balanced.
This morning
my spot on BBC Breakfast was stood down for some breaking news. These things
happen. But here are the script and notes I wrote about CPP and its mis-sold
insurance products.
CUE: A firm
which sold millions of people insurance against ID theft and loss of their bank
cards has been fined more than £10 million by the financial regulator and told
to pay compensation to customers.
CUE: The Financial Services Authority revealed that CPP had told customers untruths and misled them
while selling the insurance, which was unlikely to pay out in any normal
circumstances. Paul Lewis is in our
London studio
Q: What did
CPP sell and why was it mis-sold?
PAUL: Two
products were mis-sold. What CPP called card protection plans which were supposed
to pay out if you had money stolen from your account – but of course if you do
the banks pay out in almost all circumstances so the insurance was generally useless. The
FSA revealed CPP charged around £35 a year for it but the product cost it just 60p. The
other was ID theft insurance. It was more expensive at £84 a year but it cost
CPP just £16. Both products were mis-sold by sales staff who, to put it bluntly,
lied. They used false statistics, made misleading claims, exaggerated the value
of the insurance – which as I said would almost never pay out – and they gave
advice which in the later years they were banned from doing. Their contracts
also contained unfair terms.
Q: How did
it manage to sell so much?
PAUL: Altogether
it sold more than £840m of new and renewed business to 4.4 million people
between 2005 and 2011. CPP sold about 10% of its products directly. But the
bulk of them – about 4 million new policies – were sold as a result of a
partnership with four High Street banks – Barclays, RBS, Santander, and HSBC.
In some cases the bank put a phone number on newly issued cards with the
instruction to call it to ‘activate’ the card. In fact you got straight through
to a CPP sales person. So some banks at the least colluded in this mis-selling
to 4 million people.
Q: And have
the banks also been censured?
PAUL: No. Not
yet. I understand the FSA is in discussions with the banks and other CPP partners. CPP has been
fined £10.5m for direct sales and is expected to pay out £14.5m compensation. But ten times as many policies
were sold through the banks – so will the fines and compensation be ten times
as big? We won’t know that for some time. But it is more bad news for the reputation
of those banks.
Q: What
compensation will customers get?
PAUL: Anyone
mis-sold these products – and the FSA report makes it clear that was widespread,
so it may be most or almost all of those with them – will get their premiums refunded
plus interest. CPP has been banned from selling these products – in fact
its whole website is down at the moment – but those who have them are allowed
to renew. Anyone who is offered a renewal should think very carefully about
whether it is good value for money. And should prepare to make a claim for
compensation when the scheme is announced in the New Year.
Q: What does
the company say?
PAUL: In a
long statement it apologised, said this was all in the past, it would pay the
penalties, and move on to a better future.
You can call CPP in office hours free from a landline on 0808 156 0199
You can call CPP in office hours free from a landline on 0808 156 0199
