Banks agree to recompense for unnecessary credit card insurance

Around two million consumers in the UK were sold credit card insurance that they never needed. The banks’ attempt to sell the policies has led them to compensate for their misdeed. They have agreed to recompense for the loss, which their customers had to incur. The pay-off decided is approximately £270 (AU $580) per card for more than two million customers.

The credit car insurance was sold from January 2005 to August 2013. The banks involved are AIB Group, HSBC, Barclays, Tesco Personal Finance, Lloyd’s Bank, Capital One, Clydesdale Bank, the Co-operative Bank, Santander and the Royal Bank of Scotland. They agreed to set up a body that will contact everyone affected and tell them how to claim compensation. There were 11 banks that took part in marketing the insurance product of Affinion International Limited.

The customers are expected to receive compensation forms in the coming weeks. The first payment will be made in late September. The Financial Conduct Authority or FCA came across the fact that customers were paying for cover costing up to £25 (AU $53) per year. The insurance is unnecessary, according to the FCA. Customers don’t need insurance for protection against fraudulent use or for stolen cards because the card issuer should be responsible for such
incidents.

The FCA fostered tracking the redress process without holding any further investigation when Affinion, the banks and credit card companies agreed to voluntary settlement. £27 billion (AU $58bn) have been put aside by the lenders in order to make sure the compensation claimed by the affected consumers are fulfilled.

The customers who fell prey to the scheme in 2005 will have to visit the bank personally for claiming compensation. The compensation forms are expected to be submitted untill March 18, 2016. The products that have been covered included Card Protection, Sentinel Excel, Sentinel Gold, Sentinel, Sentinel Protection and Safe and Secure Plus.

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