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LONDON (Alliance News) - UK regulators have agreed a deal with Affinion International Ltd and 11 high street banks and credit card issuers for a scheme that paves the way for about two million customers to claim compensation if they have concerns about the way that card security products provided by Affinion International Ltd were sold to them.
According to the Financial Conduct Authority, which regulates financial firms and is responsible for protecting consumers, the banks involved were AIB Group (UK) PLC, Barclays Bank PLC, Capital One (Europe) PLC, Clydesdale Bank PLC, HSBC Bank PLC, Lloyds Bank PLC, Northern Bank Ltd trading as Danske Bank, Santander UK PLC, Tesco Personal Finance PLC, The Co-operative Bank PLC, and The Royal Bank of Scotland PLC.
"No FCA enforcement action has been taken against Affinion or any of the banks or credit card issuers. The involvement of the banks and credit card issuers reflects the fact that they either sold Affinion's card security products directly, or introduced customers to Affinion's card security products. Affinion and these banks and card issuers are participating in the scheme without any admission of liability of any description on their part," the regulator said.
Affinion and the banks voluntarily agreed to be part of the scheme and will provide the money needed to fund compensation payments, the FCA said. The regulator added that it has not conducted a formal investigation into the matter.
One of the features of the card security products was insurance to cover fraudulent use if a card was lost or stolen. The regulator said the insurance was "unnecessary" because the customer's card issuer was typically responsible for any transactions after the cards were reported as being lost or stolen.
Before reporting the loss of or theft of their cards, customers were only liable for unauthorised transactions in limited circumstances, the FCA said. The bank or card issuer usually covered customers for anything over the first GBP50 if transactions took place before the card was reported missing.
The amount of compensation paid out will depend on how many eligible customers decide that they want to claim compensation and the length of time they held the product in question. The average annual cost of the card security product was GBP25.
"If approved, this scheme will provide those who may have concerns about the way their card security product was sold to them with a simple and free way to claim compensation," Tracey McDermott, director of supervision and authorisations at the FCA, said in a statement.
"We have been encouraged that, working closely with the FCA, a large number of firms have voluntarily come together to create a redress scheme that will provide a fair outcome for customers. Such a willingness to take steps to resolve historic problems is an important step to restoring trust in the financial services," McDermott added.
The scheme is open to all customers who bought or renewed the card security products between January 14, 2005 and August 2013 from Affinion or a bank or a card issuer that is participating in the scheme.
If customers are entitled to compensation under the scheme they will receive the amount they have paid for their policy since the start date, less any money paid out by the product and any applicable taxes, plus 8% interest per annum on the amount owed.
The products in question were: Card Protection; Sentinel; Sentinel Gold; Sentinel Protection; Sentinel Excel; Safe and Secure Plus.
"We are pleased to announce this proposed arrangement in partnership with eleven high street banks and credit card issuers," a statement issued on behalf of Affinion International said. "The arrangement, or 'scheme' as it's known, follows collaborative and voluntary conversations with the Financial Conduct Authority with no formal investigation, fines or finding of fault."
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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