We’ve been waiting since November 2012 for Card Protection Plan (CPP) Ltd to make the headlines, and the announcement of a £1.3 billion compensation plan was finally enough to make the mass media sit up and listen.
CPP were first the subject of enforcement back when the regulatory body involved was still the Financial Services Authority; but it was the latest announcement, from the newly formed Financial Conduct Authority, that caught the attention of the journalists.
The issue revolves around Card Protection or Identity Protection insurance plans – which ostensibly protect you against any losses due to fraudulent use of your credit cards.
But, unless you are demonstrably negligent and give your pin code to a stranger or do something similar, such protection is built into the law anyway.
That meant people were paying £20-30 per year in insurance premiums, for a risk they did not really face.
In total, 13 banks and card issuers are now facing the need to make compensation payouts, in addition to CPP themselves, who were the official providers of the insurance.
The FCA estimates 23 million policies may be affected, with up to £1.3 billion likely to be paid out in all.
What to do
It is unlikely that you will need to take any action other than to wait for your bank or credit card provider to contact you.
A four-stage redress plan is already in place, but this includes the need for the High Court to grant legal assent to the compensation plan as outlined.
If everything goes ahead on schedule and as currently planned, payouts should begin in Spring 2014.
However, you may still want to take action now to ensure you understand the legalities of the issue, as well as how to act if your bank never gets in touch.