Banks incur hefty fine after mis-selling insurance in CPP debacle

Some of the UK's biggest banks are to pay compensation to some seven million customers after mis-selling credit card and ID theft insurance cover. Customers will receive up to £300 each, with the total bill coming to £1.3bn. The insurance was mis-sold because in most cases it was already provided on the card. The Financial Conduct Authority (FCA) revealed that 13 banks and financial services companies referred customers to insurance specialist CPP, who subsequently sold them unnecessary policies. Recipients will be paid the original cost of the policy, in addition to eight per cent interest. The banks due to pay out include HSBC, RBS, Barclays, Santander, and Tesco Personal Finance. CPP has already incurred a £10.5m fine for its part on the mis-selling. 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 refind of premiums with interest."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 wil 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."NR