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FSA fines credit card insurer £10.5m over 'widespread' mis-selling

by Daniel Grote on Nov 15, 2012 at 08:03

FSA fines credit card insurer £10.5m over 'widespread' mis-selling

The Financial Services Authority (FSA) has issued its joint largest fine over retail activities of £10.5 million to credit card insurer Card Protection Plan (CPP) for mis-selling insurance products.

CPP has also agreed to pay redress to consumers and has estimated a further £14.5 million will need to be distributed, according to the regulator. Taken with the costs associated with the FSA investigation and the fine, CPP is facing a total bill of £33.4 million.

The FSA said it had discovered widespread mis-selling of CPP's two main products, card protection and identity protection, between January 2005 and March 2011. It added that CPP did not provide clear information to its customers or treat them fairly.

The regulator said CPP had emphasised its card protection product would provide consumers with up to £100,000 of insurance cover, when they were already covered by their banks, and that it overstated the risks and consequences of identity theft in selling its identity protection product.

CPP sold the products through its own sales channels and high street banks, generating £354.5 million profit from 4.4 million policies over the period examined by the FSA, and renewed 18.7 million policies, generating an income of £646.5 million.

It has agreed to stop new sales of products, except where they are sold as part of an insurance package, and to stop trying to keep customers who call to cancel their policies. CPP has been ordered to appoint an external 'skilled person' to monitor and report on its claims and complaints handling.

FSA director of enforcement and financial crime Tracey McDermott (pictured) said: 'While CPP's products were relatively inexpensive, they were sold widely and CPP encouraged its sales agents to be overly persistent. We have highlighted before our concerns about low cost insurance that offers little or no value to the customer. This case shows the action we will take if our warnings are not heeded.'

8 comments so far. Why not have your say?

Julian Stevens

Nov 15, 2012 at 10:18

I was persuaded to buy this product, over the phone, and although the sales person was a bit insistent, I can honestly say that I don't consider it to have been mis-sold, so I for one feel no need to complain.

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Derek Guyers

Nov 15, 2012 at 10:24

Go on Julian, have a punt, everyone else is doing it!

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Julian Stevens

Nov 15, 2012 at 11:16

Just because "everyone else is doing it" doesn't make it right. That's a bit like suggesting we should all inflate any motor or home insurance claims. It affects everyone.

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Ged Burrows

Nov 15, 2012 at 13:12

Cannot believe it - I got a phone call some time ago from them - thought it sounded like a good idea then! Anyway - while I was talking on the phone, the wife opened the door on me and caused me to jolt forward - severe whiplash - i then tripped over the cat - industrial injury as the cat is employed to keep the mice population down. I was forced to have some time off work - who can I sue as I didnt have PPI!

Come on claim boys - oops and girls - will be sued now for discrimination - send me a text or give me a call - oh and dont forget I am also owed £2,227 from the PI insurance I didnt take out!

Some may be cynical and think that the above didnt happen - I dont think it matters whether it did or not - got to keep these claims firms working on something!!!!

Perhaps i can take action against CPP for everything!

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Michael Brown

Nov 15, 2012 at 13:30

Ged

You just made my day!! Go on make a claim!!

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Richard H

Nov 15, 2012 at 13:44

So the whole concept of Caveat Emptor is being abandoned then ?

I am not so sure that the National Insurance "premiums" I am paying are doing the job for me that I expected and I didnt understand the whole thing when I started paying them decades ago. Please may I have my money back ?

Where on earth will it all end ?

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dorothym via mobile

Nov 15, 2012 at 14:19

I was persuaded to take out PPI card insurance years ago.

When they made errors when updating my info, i had difficulty cancelling my contract, which i finally did. I felt aggrieved then, and still do now. How do i claim compensation.

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Julian Stevens

Nov 15, 2012 at 14:42

Write to the insurer stating your case. But was the insurance mis-sold of just badly administered?

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