£1.5bn fund for victims of mis-selling

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City regulators are today expected to announce a compensation fund of up to £1.5bn for victims of an insurance mis-selling scandal.

The scandal centres on York-based CPP Group, which sells card protection for banks and building societies, and has already been fined £10.5m.

CPP has been working with lenders and regulators to put together a much larger compensation pot for customers, largely funded by the banks.

Reports last night suggested the Financial Conduct Authority (FCA) will today announce details of the scheme, confirming the major high street banks have signed up to the fund of between £1bn and £1.5bn.

Some of the banks involved will make separate announcements detailing their individual financial exposure, Sky News said. The FCA declined to comment.

CPP, which announces its half-year results today, secured its future by agreeing a new financing deal with its own lenders last night.

The mis-selling scandal ran between 2005 and 2011, during which time CPP sold 4.4 million policies and renewed almost 19 million.