Once again the banks are in trouble. Hot on the heels of the PPI debacle we now have the CPP (Card Protection Plan Ltd) scandal. With both CPP itself being ordered to pay back money plus the banks now being fined in connection with the same products, we consumers wonder where it will all end. Customers who have these products are advised to seek redress if they think they have been miss-sold this type of protection.
CPP: The Company Explained
Card Protection Plan Limited is a company that sell card protection and identity theft products to customers who have credit or debit cards. The CPP Group has been in existence for over thirty years selling a range of products connected to credit or debit cards or even mobile phones calling their products “life assistance “products. The company claims to be FTSE listed with award winning call centres plus has over ten million policy holders worldwide. Their website is undergoing review at the moment and is due to re-launch in December 2012.
So what is the Problem with CPP?
Once again many consumers have been miss-sold a product, in this case card protection and ID products. As consumers we are entitled to our money back if we think we have been treated poorly in terms of the sale of said products. Card Protection Plan Ltd has now reached an agreement with the FSA (Financial Services Authority) following an eighteen month investigation, to repay around £14.5 million back to consumers after they were found to have miss-sold card protection plus identity theft products between January 2005 and March 2011.
CPP Ltd has also been fined a whopping £10.5 million by the FSA for miss-selling, mainly due to the aggressive form of sales practises connected with the products. This is very similar to what happened in the PPI scandal and it is good to know that the FSA is doing its job by monitoring these products plus how they are sold to customers. Millions of consumers are once again due refunds being entitled to all the money they paid in, refunded.
The FSA found that CPP did not treat their customers fairly as:
- They did not provide clear and concise information regarding products on offer
- Pushed the fact that customers would benefit from £100,000 of insurance cover. (This was not required as customers were already covered by their own bank)
- CPP exaggerated the risks regarding identity theft plus its consequences when selling.
The FSA’s Director of Enforcement and Financial Crime stated “This is a serious case; while CPP’s products were relatively inexpensive they were sold widely with CPP’s sales agents encouraged to be persistent”. CPP used scare tactics to sell their products to customers meaning that consumers would buy a product that they did not want or need.
As is usual in these types of cases once the problem has come to light the company chairman has issued a heartfelt apology assuring customers of improvements while issuing an apology.
What exactly did the Cards Sold Cover?
When a customer took out card protection insurance they had access to a number that they would call should they lose their cards or have them stolen. Cover also included cases of fraud where persons had used the card causing deception or if their keys were lost or stolen. Identity Fraud covered expenses incurred when customers tried to get their money back plus gave advice on the same. Customers could also gain access to credit reports.
The fact of the matter was that customers were already covered for all this by their bank so the cover was in most cases totally unnecessary. Customers were once again sold a product that they did not require plus did not want.
What has this to do with the Banks?
CPP sold its products through its own call centre agents or through other agencies such as banks. Banks would introduce its customers to CPP making customers assume that the product was worthy. This was a lucrative business as CPP sold over four million policies making approximately £355 million gross profit. This new miss-selling scandal could cost the banks somewhere around £200 million in payments of compensation.
The high street banks are now in talks with the FSA due to the huge fines imposed on CPP. With some 4.1 million customers being sold these products through their own banks it is a huge worry for the bankers involved. Banks that have partnered CPP include:
- The Royal Bank of Scotland
- Yorkshire Bank
- Standard Chartered
- It has not been stated whether all these banks will be involved in compensation claims as yet so watch out for further updates on this matter.
How Much Can I Claim Back?
You are entitled to a full refund of payments for any card protection or identity theft cover you took out. For example, card protection policies cost around £35 per year while identity protection products varied but were around £84 so for one year you could claim the two amounts although discussions on further compensation are still in progress.
How Do I Claim It?
In the first instance, get in touch with CPP. They have a number to call if you have concerns, 0808 156 0199 or their call centre can be called on 0844 848 1517. The company has said that they will get in touch with customers but if you do not hear or cannot wait just give them a call. CPP have said that they will not contact customers that are involved until a decision regarding the banks involvement has been investigated, with a decision made, as to any fine or compensation. If CPP do not offer you compensation or if you are not happy with any amount granted you can always consult the Financial Ombudsman who will look at all the factors involved and make a judgement based on what he finds. You can do all this yourself you do not require the services of a middle man in order to reclaim your money.
Was I Miss-sold These Products?
If you took out cover or bought any of these products from CPP ask yourself:
- Was the product sold to me in an aggressive way?
- Did the advisor play on my fears of identity fraud by overstating the facts surrounding it?
- Was I told I was not covered by my bank for fraud?
- Did the company emphasise the monetary amount you would benefit from?
- Did they explain the limited case scenario where you would benefit from cover?
- Did you feel brow beaten into accepting cover?
- Did the advisor persuade you not to cancel cover when you really wanted to?
- Did they obtain permission from you to take policy payments from another card if your present card had expired?
If you feel that any of the above pertains to how you were sold one of the CPP products then you were probably a victim of miss-selling. Read a comprehensive report on the FSA findings and Final Notice regarding CPP miss-selling. The report also contains information re refunds and compensation matters.
Even though a decision re the banks role in this episode of miss-selling has not been settled customers can complain to their own banks if they feel anyone at the bank was aggressively selling or was misleading when it came to facts or explanations involving the products. Once again if customers are not happy with the final verdict they are advised to consult the Financial Ombudsman.
As consumers we are often taken for a ride when it comes to financial products. We tend to trust our financial institutions thinking they have our best interests at heart. We must all remember that banks and financial services are businesses, there to make money, while making it from the little man in the street seems to be the order of the day at this moment in time.
Customers like to feel that they are protected when it comes to dealing with their money and it is a very sad indictment that our own banks will make a quick buck out of us even when the products they are introducing on behalf of other agencies (while making a tidy commission for themselves no doubt) are less than ethical. Thank goodness the FSA has managed to investigate, highlight and bring to our attention such issues. Now we are better informed due to these scandals, perhaps we will not be so easily drawn in and hoodwinked by people we think have our best interests on their minds.
Customers must always give themselves time to think things through before agreeing to take on a product no matter who it comes from or where. A little cooling off time gives us space to think, investigate and come to an informed decision rather than be pressed into something we do not understand or need and want. If these selling scandals have taught us anything it is that customers should always be aware, think things through and even take advice if necessary before buying a financial product. Remember that a wolf may lurk beneath the sheep’s clothing!