Millions of customers who have been mis-sold credit/debit card theft insurance are in line for compensation payments from a £1billion fund which has been set up.
The fund relates to customers of HSBC, Barclays, Santander, Natwest and Nationwide (note Lloyds and Halifax did not sell the policies). This follows an investigation by the FCA (formally the FSA) which found that many debit and credit card customers purchased such policies. The policies, which cost up to £120, promised cover against theft from credit/debit cards. However, many customers did not realise that the banks often covered these risks for free.
A further policy costing in the region of £60 which promised £60,000 protection against losses through identity fraud, actually only covered administration and legal expenses and not the costs of the fraud itself.
Over 4.4 million of these policies were sold between January 2005 and March 2011.
The banks mentioned above will shortly be sending out letters notifying customers of how to claim compensation. This will add more financial pressure to the banks who are already reeling after massive payouts from the PPI scandal, not to mention the latest hedging/complex derivative scandals which are expected to cost the banks billions in compensation.
By Leanne Millhouse, commercial litigation solicitor