The redress bill could reach £1.3bn for seven million customers who between them bought and renewed around 23 million policies.
Martin Wheatley, chief executive of the FCA, said: “We have been encouraged that, working closely with the FCA and despite their different business needs, a large number of firms have voluntarily come together to create a redress scheme that will provide a fair outcome for customers.
“This kind of collaborative and responsible approach is a good example of how firms are taking more responsibility and helping – step by step - to rebuild trust.”
The banks and credit card issuers which have agreed to join the scheme with CPP are:
• Bank of Scotland Plc
• Barclays Bank Plc
• Canada Square Operations Limited (formerly Egg Banking Plc)
• Capital One (Europe) Plc
• Clydesdale Bank Plc
• 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
The card protection, which cost around £30 per year, and the identity protection, costing around £80 per year, were widely mis-sold by CPP resulting in a £10.5m fine in November 2012.
Customers were given misleading and unclear information about the policies leading to the purchase of cover that either was not needed or to cover risks that had been greatly exaggerated.
As well as CPP selling directly to customers, high street banks and credit card issuers introduced millions of customers to CPP.
Wheatley said the involvement of the banks and credit card issuers reflects the fact that they introduced customers to CPP’s products and so must share responsibility for putting things right.
Before the scheme can go ahead it must first be voted on by customers, who are the scheme’s creditors, and approved by the high court before redress can be paid which is expected to be Spring 2014.
Wheatley added: “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.
“To try and ensure that as many people as possible hear about the arrangements and that nobody misses out on redress CPP, the banks and the credit card issuers have agreed to pay for a series of adverts in the national newspapers.”
