York insurer agrees to £1.3bn deal over mis-selling

UP TO seven million customers who were mis-sold cover for bank and credit cards are set to receive payouts after a £1.3bn compensation deal was approved.

The credit card insurer, CPP, said customers had overwhelmingly backed the proposed compensation scheme, with 98 per cent voting in favour, which now paves the way for payouts to begin in the spring, subject to High Court approval next week.

York-based CPP and 13 high street banks and card companies – through which the insurance was sold – have agreed to a package that will see affected policyholders receive between £100 and £300 each.

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CPP was fined £10.5m in November 2012 after regulators found it gave misleading and unclear information about credit card and identity theft insurance.

The mis-selling scandal ran from 2005 to 2011, although only a proportion of the policies sold were arranged directly through CPP.

Many customers were sent new bank cards which they had to activate by going through a CPP call centre, where they were offered insurance.

They were persuaded to spend £30 a year to insure their card, or around £80 for an identity protection policy – despite many of the customers already having cover provided by their bank or credit card firm.

CPP revealed last month that its compensation bill had risen again, by another £10m to £65.8m and has warned again that the figure could increase further.

The group chief executive of CPP, Brent Escott, said: “A key priority is to achieve the best outcome for customers affected by the historical issues in the UK business and customer approval for the scheme marks a further step forward in this process.”

CPP said at the end of October that its performance in 2013 would be “significantly” worse than 2012.

It cautioned that publicity and communication surrounding the scandal saw the proportion of UK customers renewing their policies slip by 0.6 per cent from 70.7 per cent at the end of June, adding it may fall further.

The group had 7.6m live policies in October, down from 7.9m at the end of June last year and 10.1m in June 2012.

The CPP Group has its headquarters in the Holgate district of York where it employs about 600 staff.