Thursday, 31 October 2013


Two million people can get at least £135 off their electricity bill this winter. It's called the Warm Home Discount. Some will be paid automatically. Others have to claim or they will not get it. The sooner you claim the better.

Core Group

The biggest group – called the ‘core group’ – are more than a million older people who get pension credit and fulfill other conditions. The ones who qualify fall into two categories depending on their age on July 20, 2013.

•    Those under 75 who get the guarantee part of pension credit but not the savings credit. That means their income before the pension credit will normally be no more than £115.30 if single or £183.90 if a couple. Some with a disability may get more but the key test is they get guarantee credit and NOT savings credit.

•    Those aged 75 or more can have a higher income and get the discount. Their income before pension credit will be less than £145.40 a week (single) or £222.05 (couple). Some with disabilities can qualify with a higher income. As long as they get some guarantee credit they will qualify even if they get savings credit as well. 

Pensioners who ONLY get savings credit part of pension credit will not qualify under this Core group category.

The qualifying date is 20 July 2013. You must be getting the pension credit on that date and it is your age on the date that counts. For couples it is the age of the older partner which counts.

People in the core group should not have to claim. Suppliers will use information from the Department for Work and Pensions to pay them automatically. However, some who qualify may not be identified. If you have heard nothing by Christmas and you think you qualify, contact your energy supplier. Some of the smaller suppliers do not pay the discount and if your energy is supplied by one of them you will not get it. Details below.

Broader Group

The broader group who qualify are low income households where there is a young child or someone with a disability. With some suppliers pensioners not in the core group can qualify as part of the broader group. People in this broader group have to make a claim.

Unfortunately the energy suppliers all have different rules for qualifying. They range from the most generous which is British Gas to the least which seems to be EDF.

If your income is low and there are young or disabled children or disabled adults in the household or you are over pension age (and are not in the core group) you may be entitled to the discount. Around half a million qualified last year in this group.

If you think you may qualify contact your supplier and say you are asking about the Warm Home Discount. Or look online on your supplier's website and search for Warm Home Discount. There is a list of the suppliers who are in the scheme here The links there take you to the Warm Home Discount details on each website.

Claims should be made as soon as possible. Suppliers have a fixed amount of money for this group and when that runs out the supplier will close its scheme. Last year some closed their scheme by the end of December. 

People in the broader group should not switch supplier until the discount is made. They could be disqualified if they do.


The discount is normally taken off your winter electricity bill which could mean waiting until March 2014. People in the core group who have moved supplier since July 20, 2013 will be sent a cheque by their old supplier. Broader group customers who move supplier before the discount is made will probably lose it. All discounts should be made by the end of March 2014. People on prepayment meters will have the credit added to their key. Some will be sent a voucher to take to the Post Office to credit the key. Other suppliers will update the key automatically.


The big six electricity suppliers are legally obliged to offer the Warm Home Discount. They are British Gas (including Sainsbury’s), EDF Energy, E.on, npower, Scottish Power and SSE (that includes Atlantic Energy, Scottish Hydro, Southern Electric, and Swalec). SSE also operates the scheme for Ebico, Equipower, and M&S Energy. First Utility and Utility Warehouse are also in the scheme. If you get your electricity from another small supplier you will not get the Warm Home Discount.

British Gas is adding £60 to the Warm Home Discount for dual fuel customers or £20 for electricity only customers. It is paying £40 for customers who only get gas from it if they were on the Essentials social tariff. Scottish Power is sending an extra £50 to the 140,000 customers who got the warm home discount last winter. This money is a fine imposed on the firm by the regulator Ofgem for mis-selling its services.

More information lists the suppliers who give the Warm Home Discount  involved with links to their schemes.

The Home Heat Helpline 0800 33 66 99 can give advice about the Warm Home Discount and other schemes to help with heating bills. You could also contact the Energy Savings Trust or the Cntre for Sustainable Energy They can give advice about local help with insulation as well as national schemes.

Wednesday, 25 September 2013


*** WARNING - the information below was updated and was accurate on 10 October 2013. But these deals can be pulled at any time.***

You can freeze your gas and electricity bills for the next four winters. That is two years longer than Labour leader Ed Miliband promised at his party conference this week.

If Labour wins the election in May 2015 he would freeze prices soon after and it would last until January 2017 when a new regime of price controls will begin. But three major energy companies are currently offering fixed tariffs which start now and end around the same time - one ends two months later than Labour's promise.

If you freeze now you will avoid price rises for four winters - including the one coming up. There was widespread speculation before Ed Miliband's speech that British Gas was preparing for a rise of around 8% (£100 on the typical dual fuel bill) and other suppliers would then follow suit.

The deals
Npower Price Protector fixes prices from when you take it out to 31 March 2017 - two months longer than Labour's plans and covering four winters. It costs a bit more than a current standard tariff - £84 a year more - but it will save you money over the next four years. If you're on a better deal than the standard tariff the extra cost of the fixed deal will be more expensive now. But it will almost certainly save you money over that period. There is no penalty for leaving early if a better deal comes along. It is the cheapest and longest lasting of the log fixes on offer. 

EDF Blue+price freeeeze also lasts until 31 March 2017. It is about the same price as the Npower deal and has no penalty for leaving. 

Scottish Power Fixed Price Energy (Help Beat Cancer) fixes to 31 December 2016 - a month before Labour's deal would end. You can leave the deal at any time but there is a penalty if you do of £50 for a dual fuel deal. It is currently almost £100 more than an average standard Scottish Power tariff. 

So what's the catch?
If you fix now with any of these deals you will be paying slightly more now. But as price rises are announced in the next few weeks - as is widely expected - you will beat that rise and may end up paying no more this winter than if you didn't fix. And over the next three winters you will almost certainly save money. Freezing your tariff also has the advantage that you know what you will be paying.

Fixing the price of your fuel is a gamble on future prices. If they go up you will be happy. If they go down you will be out of pocket. But you can leave these three deals at any time - only Scottish Power has a penalty for leaving and it is modest.

These deals are only available to credit customers not prepay customers and savings will be greater if you pay by monthly direct debit and do not get paper bills. They come with a 'dual fuel' discount discount for customers who take gas and electricity - not everyone can. 

Short term fix
If you are not keen on paying a bit more now to freeze your bills for four winters a short term fix may be better for you. First Utility iSave Fixed freezes prices until 30 April 2015 and is the cheapest for an average dual fuel bill user but has a £50 per fuel penalty for early leavers. Pioneer Energy No Worries Fixed lasts for 12 months from when it is taken out and has a £30 per fuel penalty. Scottish Power Online Fixed Price Energy lasts to 31 March 2015 with a £25 per fuel leaving penalty. Npower Online Price Fix lasts to 31 October 2014 (expect it to disappear before that date) and EDF Blue+ Price Promise lasts to 31 March 2015. Neither has a penalty. 

Other choices
In between those eight long and short-term fixes there are seventeen others currently on the market. Before switching do check out the customer service of the energy company you are switching to. Some large and some small have poor reputations. Which? has assessed them here

Price rise speculation

Before Ed Miliband's speech there was widespread speculation in the press that British Gas would shortly announce an 8% increase, adding around £100 to the average annual dual fuel bill. No announcement has yet been made and British Gas refuses to comment but it makes a statement to investors on 14 November and will probably announce any change before that. 

SSE - which owns the Atlantic, Southern, SWALEC, and Scottish Hydro and supplies the M&S Energy brand, has announced a rise of an average 8.2% from 15 November. Inevitably the complex changes mean some will see a lower rise than that and some considerably more. Smaller supplier Ebico also announced a rise from 15 November - in its case of 9.8%. Others are expected to follow suit. 

Some politicians have suggested the SSE rise is to pre-empt Miliband's promised freeze. That is not true. First, we knew prices would rise this winter. Second, it is too long before the May 2015 General Election. Pre-emptive rises next winter cannot, of course, be ruled out. 

The wholesale price of gas - which affects the price of electricity too - has risen since last winter. And wholesale prices make up half the cost of your bill. The cost of transmission (the pipes and wires) is a fifth of your bill and it is also rising. So too is the cost of going green(er) and helping low income families. So the pressure on prices is only upwards. Since 2008 there have been 93 price changes - 72 have been rises.

Switch and save
If you just want the cheapest deal now and don't want to fix, then go to one of the accredited switching sites like Switch with Which ( or which gives you £15 cash back. The best guide to switching is Money Saving Expert It also runs the Cheap Energy Club which helps with the switching process and lets you know if a cheaper deal comes along. 

If you have  never switched and are on a standard tariff then you will always save by switching - on average nearly £200 a year. If you have switched before you will probably be able to find a cheaper tariff though the saving will not be as great.

You will also save more than 5% on your bill by changing to a monthly direct debit if you do not already pay that way. The disadvantage is that the energy company charges you each month on estimated use and you can end up in credit. You should be refunded any surplus once a year – and more often if you ask for it.

Other circumstances
If you are a tenant you can still switch supplier. Ofgem has a guide to that

If you are on a pre-pay meter then you can still switch though the choices are more limited and the savings not as great. If you can it is best to change to a credit meter and pay by monthly direct debit. 

If you have a poor credit record or are in debt to your supplier switching may be more difficult.

Friday, 20 September 2013


The new swifter switching system for current bank accounts was launched this week. But I was very sceptical when the Money Advice Service said that some people could save hundreds of pounds by changing their current account. The MAS (you may have seen its ‘ask MA’ adverts) was set up by Government but is (reluctantly) paid for by the financial services industry.

To mark the start of swifter switching MAS has taken on the difficult task of comparing current accounts and producing a league table of the costs and benefits. It uses information provided daily by the banks to work out the amount of interest – if any – paid and the charges for overdrafts.

The online system allows you to input details of your current account use – how much goes in each month, the typical balance at the end of the  month, and how often you slip into an unauthorised overdraft or exceed an approved overdraft limit. MAS then produces a list of more than 60 current account ranked from the most expensive to the cheapest for those circumstances. 

The results surprised me.

For example, if you pay in £2000 a month, typically have a £250 overdraft at the end of the month and slip six times a year over your overdraft limit the cost can range from nothing (in the first year) via around £150 to £400 with various accounts in major High Street banks to a whopping £1268 with the most expensive. So if you are with the wrong bank moving to the best could save you hundreds of pounds.

And if you are the kind of person who is always in credit with £3000 a month going in and a balance typically of £5000 then the best account will be worth £181 a year minus a £24 fee and the worst – which is most of them – will pay you nothing and charge you nothing.

Of course the results are just a guide and it is hard for anyone to predict what the pattern of their current account use will be in the future. But the tables certainly show just how much better off switching can make you. Try it

If you are worried more about ethics than making money then another list provided by the not for profit group Move Your Money may prove useful. It ranks around 90 banks and building societies that provide current or savings accounts using measures which it calls honesty, customer service, culture, supporting the economy, and ethics. On current accounts three building societies take top places with scores of more than 75 out of 100 and two smaller branch-based banks are also in the top ten. At the bottom of the list are the main High Street banks with Barclays taking the worst spot with a score of just 4 out of 100. Try it out at which also explains how the scores are worked out and why each bank or building society gets the score it does. 

If you’re feeling twitchy about switching these two websites can at least give some guidance over what you might gain – in cash and a warm fuzzy feeling.

Details of the current account switching service which moves your account in around nine days (seven working days) and promises a refund of any fees or penalties if things go wrong

The future
Although the new switching service is better than the longer and less certain process we had, it is not what a truly competitive market needs. The only real solution to the lack of competition is full bank account number portability so your unique sortcode+account number would stay with you when you switched from one bank to another. No-one who paid money in or took it out would even know you had changed banks as they would use the same number. But your account on that number would simply be looked after by your new bank. It would be similar to the portability of mobile phone numbers which allows means you to change provider but keep the same number. 

And if another two digits were added to the 14 digit sortcode+account number - making it the same length as a credit card number - then it could contain what is called a checksum digit. That checks that any number is genuine and would end the misery of mistyping a recipient's bank account number and finding your money had gone to a stranger who might resist its return. 

The banks have rejected number portability several times. But one day....

Thursday, 12 September 2013


The DWP is seeking leave to appeal against the Fife decisions. In an Urgent Circular, which now calls the policy 'Removal of the Spare Room Subsidy (RSRS)', it tells local authorities that overcrowding laws which specify the size of bedrooms are not relevant in assessing what is a bedroom for the purposes of these benefit reduction rules. It does concede that a bedroom must be "large enough to accommodate at least a single bed". But warns that rooms classified by the landlord as bedrooms cannot be discounted just because they are habitually used for something else such as storage by the tenant. 


The Fife decisions
Four council tenants have had their full housing benefit restored after challenging the definition of 'bedroom' in regulations which reduce housing benefit where a home has more bedrooms than the rules allow.

A judge ruled that a room which was too small to be a bedroom or which was being reasonably used for another essential purpose could not be counted as a bedroom.

The cases are among the first to be decided under the controversial 'bedroom tax' rules which lay down how many bedrooms a household needs. If they have more it reduces the help the tenant gets with their rent. The government calls it ‘ending the spare room subsidy’. It is more accurately referred to using words from the Regulations as the housing benefit excess bedroom reduction. Others call it social rented sector size criteria. But that phrase is of little merit.

The policy began on 1 April 2013 for working age tenants who rent their home from a council or housing association. The rules specify how many bedrooms a household can have - one for an adult or a couple, one for a child aged 16 or more, one for two children under 10, one for two children of the same sex aged 10-15, one for an overnight carer. A foster child and some disabled children can also be allowed their own bedroom.

Those rules are fairly precise. But in contrast the Regulations do not define ‘bedroom’ at all. It is left to the local authorities which pay housing benefit to decide what is or is not a bedroom. DWP guidance - which is not binding - says "It will be up to the landlord to accurately describe the property in line with the actual rent charged". (Housing Benefit and Council Tax Benefit Circular HB/CTB A4/2012 para. 12)

Typically the housing benefit office asks the rent office or the housing association how many bedrooms there are in a property and uses that number to apply the excess bedroom rules. But SG Collins QC sitting as a judge in the Social Entitlement Chamber of the First-Tier Tribunal in Kirkcaldy found that such a procedure was inadequate.

Five appeals by tenants against decisions of Fife Council to reduce their housing benefit were presented to him by solicitor Graham Sutherland of Fife Law Centre. Each of the five was examined on its own facts and in four of them the Tribunal held that a room which had been assessed as a bedroom was in fact not one. It the fifth case the Tribunal ruled that a room used as something other than a bedroom could in fact be counted as one.

Too small
The judge ruled in three cases that a bedroom for an adult had to be at least 70 square feet (6.5 sq. metres) in size. He relied on a law about overcrowding which specified that a room under 70sq ft was inadequate for an adult and between 50 and 70 sq.ft. could only be used by one child under 10 (see Housing (Scotland) Act 1987 s.137). There are similar provisions in England and Wales (Housing Act 1985 s.326). It has never been clear until this judgement whether these rules could be used to define a bedroom in these housing benefit excess bedroom reduction cases.

But Mr Collins was in no doubt "Under-occupancy is the flip side of overcrowding...the disputed room does not properly fall to be classified as a bedroom". He added that a smaller room may be adequate for a carer who occasionally had to stay overnight but not otherwise.

Used for other things
In other cases the judge considered whether the fact the room was used for something else other than as a bedroom meant it could not be counted a one.

Here he laid down clear rules. First that there was 'a well established alternative use of the room' and 'that alternative use is in reality not a matter of choice for the occupant but reasonably required for their continued occupation of the property as their home'.

In one case the Judge ruled that using a room to store gardening equipment such as a strimmer was not reasonable as it could be stored outside in a small shed. The tenant lost his appeal.

In another case he decided that a downstairs room which was the only available space for a wheelchair was a reasonable use and restored the tenant's benefit. And in a third case - which was won by the blind tenant because she was in fact exempt from the rules - he considered that a Braille machine, computer and other equipment to do with her disability may have been a reasonable use of a spare room but he needed more evidence.

Future guidance
The decision of a First-Tier Tribunal is not binding on other cases. But these judgments set down general principles that other lawyers and at least one QC agree with. Because 'bedroom' is not defined in the Regulations, a council which decides on Housing Benefit cannot just rely on a statement from the landlord that the property has a certain number of bedrooms. Each case must be examined on the particular facts to check that a particular room is suitable as a bedroom and, if it is, to consider if it is being reasonably used for something else.

Only if it is physically suitable and is not reasonably being used for something else can it be counted as a bedroom.

Tenants whose housing benefit has been reduced on the grounds they have excess bedrooms could consider if they could appeal on similar grounds to those accepted by Mr Collins’s Tribunal. To do so they may need help either from the local Citizens Advice office or a Law Centre if there is one.

Govan Law Centre has a guide to help tenants challenge the housing benefit excess bedroom reductions

Government response
The Department for Work and Pensions says that it is looking into these decisions but they do not alter its policy which is to prevent housing benefit from being paid for a spare bedroom in social housing. That policy is part of its attempts to reduce the £24 billion a year housing benefit bill. It will also help make better use of the available housing stock by encouraging people with spare rooms to move to a smaller property.

The DWP also says it has provided £65 million this year for local councils to support vulnerable residents who are affected by this policy. Tenants can apply to their local authority for a Discretionary Housing Payment to cover the shortfall caused by an excess bedroom reduction. They may not get it.

More information
For my earlier guide to the bedroom tax see

Is 'Bedroom Tax' a Tax?

And Government attempts to rename 'bedroom tax' 'ending the spare room subsidy'



You all know what I mean by the phrase 'bedroom tax'. It is the reduction in the help with rent given to council and housing association tenants who have more bedrooms than the rules say they should have. The phrase has been used tens of thousands of times since it was first used in early December 2011. One question that seems to worry many people is whether it is an accurate description of the rules.

In one sense of course it's not. It's a two word phrase and the policy itself runs to many paragraphs. Some people including Government Ministers prefer the five word phrase ‘ending the spare room subsidy’. One even gave it the status of initial capital letters recently as ‘ending the Spare Room Subsidy’! More of that phrase later. And now - 23 September 2013 - the DWP has also added the capital letters to the policy which is now referred to in an Urgent Circular to local authorities as 'Removal of the Spare Room Subsidy (RSRS)'. See

In fact the policy can be accurately and objectively described in five words taken from the Regulations that introduced it - housing benefit excess bedroom reduction. 

But is ‘bedroom tax’ accurate so far as it goes?

No-one disputes the policy is about bedrooms. The number of those is at the heart of it. A single person in a two bedroom flat has one more bedroom than the regulations specify and their housing benefit will be reduced by 14% as a result.

The argument is whether that 14% reduction is correctly described by the word 'tax'.

The definitive guide to the meaning of English words is of course the Oxford English Dictionary, the OED.

tax, n.
1.a. A compulsory contribution to the support of government, levied on persons, property, income, commodities, transactions, etc., now at fixed rates, mostly proportional to the amount on which the contribution is levied.

That doesn't seem too far off describing the housing benefit excess bedroom reduction. It is compulsory for those to whom it applies as it is laid down in Regulations. It does support government because it is part of attempts to cut the £24bn annual cost of housing benefit and itself is estimated to save government about £500mn of that. The rate is fixed and at 14% of the rent (or 25% for two excess bedrooms) so it is certainly proportional to the amount on which it is levied.

So on the face of it the reduction is a 1.a. tax.

Hang on hang on, critics say. A tax has to be levied on one's own money. This is not levied on money these people have earned but is just a reduction in the money society gives them. Taking less off the government is not the same as giving it money! So it is not a tax. That initially plausible argument is completely undermined by the fact that removing child benefit from high earners is a tax. Details below.

And in any case 1.a. is just the start.

1.b. The rate at which anything is charged.

Even though it has not been used since 1455 (that's the OED for you!) that certainly could describe the rates of 14% and 25% which are after all the reduction itself. But there is more.
2. fig. Something compared to a tax in its incidence, obligation, or burdensomeness; an oppressive or burdensome charge, obligation, or duty; a burden, strain, heavy demand.

So if anyone commonly compares the housing benefit excess bedroom reduction to a tax in those ways then it is, well, a tax. That's how language works. And many of those whose benefit is reduced say that it is oppressive, burdensome, a strain and a heavy demand. You may not agree with them. But under this definition it is a tax, both ways.

Now, how does the OED define 'subsidy'. Oh!

subsidy, n.
2.a. A tax...

I think I'll leave it there! But no you say tell us more. OK. The more common modern usage of ‘subsidy’ is

3.a. A donation of money or other property, usually made to provide assistance.

So. If housing benefit is a subsidy then it's a donation. And taking part of it away after it has been given (and that is how the regulations work) seems to get us back to the 1.a. tax.

OED? More like QED!

Child Benefit analogy
Housing Benefit is not the only benefit which is taken away from people. Child Benefit is taken back if the income of either partner in a household exceeds about £50,000 (full details of this in my blogpost here

The reduction of child benefit, which can be between 1% of the benefit and 100% of it, is done through income tax. The rules are set out in the Finance Act 2012 Schedule 1. It inserts a new section in the Income Tax (Earnings and Pensions) Act 2003 which reads 

              681B                 High income child benefit charge
(1) A person (“P”) is liable to a charge to income tax for a tax year if—
(a) P’s adjusted net income for the year exceeds £50,000, and
(b) one or both of conditions A and B are met.

(2) The charge is to be known as a “high income child benefit charge”.

More conditions follow. But this law clearly says that taking away child benefit is done through income tax - and collected through self-assessment. If taking away child benefit is a tax than by analogy so is the housing benefit excess bedroom reduction. 

Or perhaps Ministers will start referring to the child benefit charge as 'ending the high income progeny subsidy'! We shall see.

Thursday, 29 August 2013


CPP Compensation can no longer be claimed through this scheme. If you had a similar product from Affinion and have had a letter from AI Scheme Limited see my Affinion blogpost and see Exceptions below to see if there is another way you can claim compensation.

UPDATE 3 October 2014
CPP compensation can no longer be claimed through the scheme except in the most exceptional circumstances. The deadline for those claims is 28 February 2015. The normal closing date of 30 August 2014 is long past and the Financial Conduct Authority has published the outcome of the scheme. It paid out only £450 million to just under 2.4 million customers, an average of £190 each. That is about one third of the number who were entitled to compensation and who were contacted by the scheme. And it is about a third of the £1.3 billion compensation bill that was expected. So the banks and other providers have once more got away with mis-selling profitable rubbish and keeping most of the proceeds. See my blogpost Misleading with Impunity.

The Financial Conduct Authority formally launched the compensation scheme on 3 February 2014.

It admitted to me that 140,000 people bought these products from a firm that has not joined the compensation scheme. And the scheme does not include premiums paid before 14 January 2005. In both cases you can still make a claim to get them back through other channels. That process is explained below.

Although the FCA says it is 'compensation' in fact no compensation is being paid. You will just get back the premiums you were tricked into paying and taxable interest at 8%. So far no firm that colluded with CPP to to mis-sell these products has been fined. See my blogpost Misleading with impunity

If you paid a firm called CPP to insure your credit or debit card against loss or fraud you are almost certainly due compensation. And if you paid the same firm for ID theft protection you should also get money back. These products may have been sold under different names. But they will all have come through CPP.

Seven million people could be due up to several hundred pounds each. If you are one of them it is well worth claiming.

Compensation will normally be due if you bought or renewed either product from 14 January 2005. To qualify you will have to say you were mis-sold the product. The form you are sent will tell you what to say. The sales process was so bad that everyone was mis-sold.

You should NOT use a claims management firm to help you. They will just take a share of your compensation but will do nothing useful.

A few people may not be entitled. Details of who may not get compensation are set out later.

The CPP Redress Scheme should have written to you last autumn to let you know you had one of the products. You may not get this letter if you have moved and it does not have your up to date address. You can call 08000 83 43 93 to let the CPP Redress Scheme know about your change of address. This number is free from landlines but from a mobile you could be charged a lot. You can also call that number if you are not sure if you had a policy. If you have moved you should insist that it checks your details.

The High Court approved the redress scheme on 14 January 2014 and it formally begAn on 31 January 2014 and the Financial Conduct Authority formally launched it on 3 February 2014

In February 2014 the Scheme will send you a form to claim compensation for being mis-sold. You will get two forms if you had both credit card protection and ID theft protection.

On this form there will be a box asking why you think you were mis-sold. The paragraphs above the box explain the reasons why it was mis-sold. All you have to do is copy one or more of those reasons into the box. The products were sold so badly that everyone should get compensation.

The sooner your return the form the sooner you will be paid. The first payments will be made from late March or early April 2014. You must return this form by 31 August 2014. If it arrives after that your claim will not be considered unless you have a very good reason for the delay.

If you claim compensation and you are still paying for the product your policy will be cancelled and any future payments will stop. The consensus is that these products offered little that was of use and were not worth the high premiums charged. Card protection insurance cost CPP 60p but it sold the product  for around £35 a year. ID Theft insurance was sold for £84 a year but cost CPP £16.

If you are refused compensation or disagree with the amount there will be a way to challenge it. 

All the premiums you paid from 14 January 2005 will be refunded. Interest at 8% a year will be added to those premiums from the date they were paid until the date of your settlement around the middle of March 2014. Tax at 20% will be deducted from the interest but not from the compensation. People who do not pay tax can reclaim the tax deducted from HMRC. People who pay a higher rate of tax will have to pay extra. Any money you have already had paid out on the insurance will be deducted from the compensation.

The CPP card protection product was sold under various names such as CardGuard, Card Safe, Card Protection, Cardholder Protection and Egg Emergency Cover.  The ID theft product was sold under the name CPP Identity Protection. Most people bought the products after calling a number on a new or replacement credit or debit card to ‘activate’ it or report its safe delivery. Those cards will have come from your bank or card provider but the product was supplied by CPP.

Apart from CPP itself the firms in the scheme are

·                 Bank of Scotland (part of Lloyds Banking Group)
·         Barclays Bank
·         Canada Square Operations Limited (formerly Egg Banking)
·         Capital One (Europe) Plc
·         Clydesdale Bank Plc (part of National Australia Group Europe)
·         Home Retail Group Insurance Services Limited
·         HSBC Bank Plc
·         MBNA Limited
·         Morgan Stanley Bank International Limited
·         Nationwide Building Society
·         Santander UK Plc
·         The Royal Bank of Scotland Plc
·         Tesco Personal Finance Plc

So if you were encouraged to buy the product by any of those firms you will be in the compensation scheme.

Some people who have one of these products may not get compensation through this scheme. But they can still claim compensation through the usual channels – put in a formal complaint to CPP or your bank or card provider and if it is refused go to the Financial Ombudsman Service.

The card protection product was changed in 2011. If you bought it for the first time after it was changed you will not be covered by the scheme. The date of change varies depending on your card provider but it is between 1 March 2011 and 18 September 2011.

The ID theft product was not changed and is covered for all dates. However, CPP Identity Protection is not covered if it was bought face to face or online. Only telephone sales are covered.

Other things that are not covered:-
  • Premiums paid before 14 January 2005 are not covered by the scheme. That's because insurance was not regulated by the Financial Services Authority until that date.
  • Similar card protection or ID theft insurance from other companies is not covered.
  • Some CPP products were sold by firms that are not one of the 13 firms in the scheme which are listed above. They may be included later but it is best to put in a separate claim now and if it is refused go to the Financial Ombudsman Service. 
  • If your CPP product was sold as part of a packaged bank account.
Even if your sale is not covered, you can still try to get compensation by putting in a formal complaint to the bank or card provider or the firm involved and if it is refused go to the Financial Ombudsman Service.


If you have already claimed compensation and been paid then you cannot claim under the Scheme. If you claim was rejected then you still have a claim if you fulfil the scheme criteria. You should be sent the claim form. But if you have not received letters about the scheme late last year then contact the Scheme and make sure you are included.

If you claimed compensation on 22 August 2013 or later then your claim will not have been processed and you should have been told that by letter. You will be sent the claim form in February and should fill it in including the box about why you were mis-sold. It will be processed with all the others.   

The CPP redress scheme

My blogpost Misleading with Impunity explains how the banks and card providers have got away with their part in this mis-selling.

The FCA statement on CPP redress scheme on 22 August 2013

The original FSA notice about the fine on CPP issued 15 November 2012

The full findings of the FSA on the misselling 15 November 2012

CPP claims 2.12
28 August 2015

Thursday, 22 August 2013


The final bill for the compensation paid out was £450 million, about a third of the expected total, as barely one in three of those entitled replied to the letter they were sent. So the banks certainly did get away with it.

Banks and other card providers who misled their customers into calling sales lines where they were mis-sold expensive and unnecessary insurance are to escape punishment.

The card providers made up to £55 for each mis-sale. But the Financial Conduct Authority regulator has decided they will not be publicly censured for breaching any of the rules which they must follow such as treating customers fairly and providing information which is fair, clear, and not misleading.

Instead they will pay into a redress scheme of up to £1.3 billion to compensate the estimated seven million people who bought or renewed these products from 14 January 2005. Compensation will not be paid until April 2014.

The FCA Chief Executive Martin Wheatley said 

"We believe this will be a good outcome for customers who may have been mis-sold the card and identity protection policies. Subject to CPP’s customers approving the scheme, these policy holders will be able to claim a full refund of premiums with interest."

How it worked
The firm behind this insurance, CPP, was fined £10.5 million last year for mis-selling insurance and not treating its customers fairly. Chief Executive Paul Stobart told me this week that the size of the fine was a surprise and that the regulator (then the FSA) had wanted to make an example of his firm. CPP says that only around 5% of the sales of the product were made directly by the firm. The rest came through a complex deceit by thirteen credit and debit card providers.

When a credit or debit card expired or was replaced the new card had a sticker put on it inviting the customer to call a number to ‘activate’ it or confirm its safe receipt. When a customer did so they were put straight through to a sales agent for CPP. After going through a charade of ‘activating’ or registering the card the agent would then try to sell the customer insurance against card loss and a service called identity protection.

Card protection was sold for £35 a year. The insurance actually cost CPP just 60p. The £35 was then divided between CPP and the card providers who took up to £21 for each mis-sold policy.

Identity Protection was sold for £84 a year. The cost to CPP including the premium and a helpline was £16. The profit of £68 was shared with the card providers some of whom got as much as £34 per sale.

The insurance product was largely useless as any losses due to card fraud are reimbursed by the card provider. And in cases where that is refused due to carelessness on the part of the customer the insurance was unlikely to pay out either. The ID protection product was also of little value and what value it had was mis-stated or exaggerated.

The FSA found that CPP sold insurance part of which ‘its customers did not need’ and for the rest it ‘failed to explain the very limited circumstances in which customers would need the cover’. CPP also ‘overstated the risks and repercussions of identity theft’.

As a result in November 2012 CPP was fined £10.5 million which it was allowed to pay in six instalments up to December 2014. Some of these payments have now been deferred further. CPP says the fine, redress and administrative costs so far have cost it £54 million. Paul Stobart, the CEO of CPP told me that figure was ‘eye-watering’ and far more than he had anticipated. Advisors alone had cost the firm £14.5m.

Nine months after fining CPP the FCA has decided that the banks and card providers which colluded in mis-selling products to millions of customers by putting misleading stickers on new cards are not to be fined or found guilty of breaching rules about treating customers fairly or providing information which is clear, fair and not misleading. The card providers were able to approve the sales scripts used by CPP (which the FSA condemned in its judgement in November 2012). They were also able to listen in to the sales calls if they chose to do so. 

CPP will write to all seven million customers at their last known address inviting them to vote for the scheme of redress. There will also be adverts in national newspapers and a website and free helpline. If a majority of those voting agree with the scheme the High Court will be asked to approve it. The seven million people will then be invited to claim. There will be no need to prove you were mis-sold. There will be a deadline for claims to be made. No-one knows how many will make it through the whole process. But CPP’s Board estimates that "the rate of responses leading to successful claims will be less than 25 per cent. of the aggregate overall population of potential claimants". CPP says that refers only to the claims on the 350,000 direct sales. If it exceeds 25% the banks can call a default on the loans and CPP’s future could be in doubt.

If you bought or renewed Card Protection or Identity Protection products from CPP at any time from 14 January 2005 watch for a letter from the firm and for adverts in case the letter does not reach you. Call the free phone number 08000 83 43 93 to update your details.

The scheme will cover everyone who bought or renewed one of these products from 14 January 2005 through one of the thirteen business partners. If the initial sale was before that date but it was renewed after that date the compensation will only cover the period from 14 January 2005. If the business partner is not in the scheme then a direct claim to that firm or to CPP can be made.

The redress will be the full amount of premiums paid since 14 January 2005 less any payouts made plus interest at 8% a year added on to the sum due.

The scheme website is but it isn't currently very helpful. The free phone number 08000 83 43 93. If you have not received a letter by 20 September ring the number to find out what is happening. 

If the scheme goes ahead, redress is expected to start from spring 2014.

If you were sold one of these products  before 14 January 2005 and did not renew it after that date then you can complain to CPP or the bank which introduced you to CPP and pursue the claim  to the Financial Ombudsman.

CPP CEO Paul Stobart told me he apologised and “we are sorry for any inconvenience and if customers were misled they should apply through the scheme and get redress.”

The firms involved
The thirteen card providers who colluded in misleading their customers and are part of the scheme are

• Bank of Scotland Plc (part of Lloyds Banking Group)
• Barclays Bank Plc
• Canada Square Operations Limited (formerly Egg Banking Plc)
• Capital One (Europe) Plc
• Clydesdale Bank Plc (part of National Australia Group Europe)
• Home Retail Group Insurance Services Limited
• HSBC Bank Plc
• MBNA Limited
• Morgan Stanley Bank International Limited
• Nationwide Building Society
• Santander UK Plc
• The Royal Bank of Scotland Plc
• Tesco Personal Finance Plc

Other business partners, who accounted for a tiny percentage of sales, are not in the scheme. Complain direct to the firm or CPP and if that fails go to the Financial Ombudsman 

CPP continues to trade as a ‘life assistance” business and now sells access to airport lounges, storage of spare keys, and a service to cancel and replace lost or stolen cards. It is still allowed to renew the mis-sold card protection and ID products if customers want them to continue. It is not allowed to market them tonew customers nor to put any barriers in the way of cancellation for existing customers. The card protection product has been changed slightly to conform with FCA rules. This year about 71% of all CPP’s customers renewed their policies.

The redress scheme website
The free phone number 08000 83 43 93. Use that to update your address or details to make sure you will get the letters.

The FSA decision on CPP 15 November 2012.

Version 1.02 28 August 2013.

Friday, 26 July 2013


Attention class – today’s topic is payday loans. We all acknowledge something must be done, but what?

Problem with payday loans is they are very expensive. Solution?

“Ah, ummm, could it too simple. Er, no, you've got me there.” *class shrugs*

Oh come on class it's not that difficult! Welby, what do you think?

“Er, might competition work if we sort of bolstered it? Just a thought.”

Anyone else? Wheatley?

“I've powers to limit the cost but I'm not at all sure using them to, er, limit the cost would, er, limit the cost?”

You at the back, Gibbons, thoughts?

“Please sir, could we cap the interest rate, making the cost lower and driving usurers out of business?”

Class rolls on the floor with laughter.

“Cap interest rates! Gibbons u fule, that would and end the problem! Then where would we all be??”

Dry, thorough, balanced, and inconclusive - 2010 OFT paper on evidence for and against credit cap worth reading

Thursday, 18 July 2013


Nearly five million customers of LloydsTSB and C&G will be moved to a new bank this summer when the bank splits into Lloyds and TSB. The change has been forced on Lloyds by the European Commission as the price for approving £17 billion of state aid in March 2009 after Lloyds bought the loss making HBOS.

A total of 631 branches are to be hived off into a separate company. The branches come complete with 4.6 million customers, eight million accounts and 7500 staff. A sale of all the branches to Cooperative Bank for £750 million was planned but fell through in April 2013. The branches are all to be rebranded TSB and will now be floated on the stock market as a separate company called TSB Bank plc. The rebranding will happen from September 2013 and the sale is expected to start in the middle of 2014.

You can check if your branch is going to TSB here and check which local branches will remain as Lloyds or become TSB here

The bank has written to all its customers – those who will move to TSB and those who won’t – explaining the changes and what they mean. But there remains some confusion. Hence this blog.

My branch is changing to TSB
Your account will shortly become a TSB account on exactly the same terms and conditions. Your sort code, account number and Internet login details will remain the same. Payments into or out of the account will not be disrupted and you will not have to inform anyone of the change.

However, you will be getting a new debit card and if you have a Lloyds credit card that will be replaced too. The new cards will have entirely new 16 digit numbers and expiry dates. The first four digits indicate the new bank TSB. The cards will not be branded TSB until after the brand is formally launched in September 2013. The newly branded cards will be rolled out as they expire or are replaced.

Some people have reported problems using these cards. That should not happen but a new bank identity can sometimes cause confusion especially abroad until systems have all been updated. Lloyds says it is working with Visa to resolve this problem. Take a second card with you at all times (a good general tip anyway).

If you have booked a holiday or a ticket with the old card you may be asked for it to validate the purchase when you collect the tickets or go to a hotel. Banks generally advise destroying old cards for security reasons. But you could keep the old card and take it with you as well even if it no longer works – about four weeks after the new one was issued. Make sure you have photo ID with you. If you are expecting to collect tickets from a machine allow more time to find a human and try to explain.

Loans and mortgages associated with the account will move too and become TSB branded. Again, the Terms and Conditions should not change. A couple who had separate LloydsTSB accounts could find one is with a branch that moves to TSB and the other may be with a branch that does not. A joint loan or account or mortgage would go with the branch where it was opened jointly.

My local branch isn't my home branch
Your LloydsTSB branch will normally be the one where you first opened your account. Since then you may have changed address – people move house far more often than they change banks. At the moment you can use any local LloydsTSB or Bank of Scotland branch to do your banking including paying in cheques, arranging finance, or making enquiries. In future that may not be possible.

1.       If your original branch becomes a TSB and you continue as a TSB customer then you will not be able to use Lloyds or Bank of Scotland branches once TSB has fully separated and been sold. Some people will find that there is not a TSB local to them and may have to travel a lot further to do face-to-face banking. But all C&G branches will become TSB and are now available to TSB customers.
2.       If your original branch is staying as a Lloyds you may find the local Lloyds you have been using will become a TSB. You will not be able to use that branch to do Lloyds banking once TSB has been sold.

In both cases Lloyds says you will be able to use the same branches as you do now for a while – even after TSB branches are separately branded later in 2013. But once TSB is sold the inter-operability of Lloyds or Bank of Scotland with TSB will end. That is expected to happen after the middle of 2014. It is still possible that Lloyds and the new owners of TSB will agree that customers can do some things at each other’s branches. Lloyds customers may be able to use C&G branches until the final transfer to TSB occurs in 2014.

I want to stay with Lloyds
Some people are not happy about the forced move and want to stay with Lloyds. They can do so but not easily. If your branch is transferring to TSB you can fill in a form to let Lloyds know you want to stay as a Lloyds customer. You will have to apply to Lloyds almost as if you were a new customer. Lloyds will take account of your previous history with the bank but in theory it could reject you if your credit rating has changed for the worse. Lloyds says that is very unlikely.

You will have to choose a current account from the present range. That could mean paying for an account which at the moment you get free. Of course, Lloyds does have fee-free accounts. But if you get insurance or overdraft deals on your present Lloyds account you may find that you have to pay for a current account to get similar deals once you become a new Lloyds customer.

If you do become a Lloyds customer again, you will have a new sort code and account number and will have to register afresh for online banking. Lloyds will transfer direct debits and standing orders. But you will have to give the new account details to an employer, pension provider or anyone else who pays into your account. Any ‘credit footprints’ due to the change will be removed from your credit history.

I am with C&G
As a C&G customer you will already find your branch is offering more services such as current accounts. As C&G is changed to TSB it will become part of a fully independent bank offering loans and credit cards as well. You are in a different position from a Lloyds customer and can only move to Lloyds by becoming a completely new customer.

I live in Scotland
All Lloyds branches in Scotland are becoming TSB. That will leave some people hundreds of miles from their nearest Lloyds. If you are remaining a Lloyds customer – because your original branch is in England – then you can use Bank of Scotland as your local branch and will be able to do so in future. If your original branch is becoming TSB then you can use the TSBs in Scotland. But after TSB is sold you will not be able to use Bank of Scotland branches.

I want to leave Lloyds
If your own branch is not moving to TSB but you live near a Lloyds branch that is changing to TSB you may find it easier to move your Lloyds account to TSB. Again, you will be treated pretty much like a new customer but the bank will take account of your history with Lloyds. You will have to choose from the range of accounts TSB then offers. Your sort code and account number will change. Any ‘credit footprint’ due to the change will be removed from your credit history.

Others may choose to move their account to another bank altogether. Now may be the moment to forget loyalty and choose your bank from scratch – because of what it offers, its customer service record, its charges, or its business principles. You would be able to make the move and keep your Lloyds credit card.

When to move
If you do decide to move your current account it may be worth waiting a little while. In September it will become a lot easier to move your current account from one bank to another. The new Current Account Switch Service will guarantee that the move will happen within seven days and payments into your account will be moved as well as those out of it. There will also be a free redirection service which will capture any payments into the old account and divert them into the new one for 13 months. The Switch Service is expected to start mid-September. More here

I live abroad
If you live outside the UK you may still have a bank account in a UK branch of Lloyds. If it is converting to TSB your account will be moved to the new bank and everything will remain the same. People who live abroad with no UK address cannot open a UK bank account so you will not have the option of remaining with Lloyds or moving your account to another UK bank.

Who chose?
Lloyds Banking Group did not want to give up more than 600 branches and nearly five million customers. No bank would. So the European Commission laid down strict rules about which branches it chose and how it dealt with the customers in them. The branches chosen could be no worse than the ones left behind. Their location was spread out geographically. Their position in the town or village and their size had to be no worse than those Lloyds kept. Their customers also had to be at least as good quality as a typical sample of LloydsTSB customers. Many permutations were tried until this list – once called Project Verde – was agreed.

All the 185 LloydsTSB branches in Scotland will move to TSB, all the 164 C&G branches (which Lloyds bought in 1997) will change to TSB. And 282 of the remaining LloydsTSB branches in England and Wales will become TSB.

A branch includes all its customers and their accounts. Lloyds is very constrained by European rules about what it can do with customers who want to remain with the bank. The arrangements described above have been agreed with the European Commission and Lloyds cannot deviate from them in any significant way.