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.