Banks face new £200m mis-selling scandal after CPP fine
Banks are facing another mis-selling scandal that could cost the industry £200m in compensation payments.
The UK’s high street banks are in talks with the Financial Services Authority
after one of the industry’s main suppliers of credit card insurance was fined a
record £10.5m and told to pay what could be £14.5m in redress to its customers.
The compensation relates to 300,000 customers sold insurance by Credit Card
Protection. However a much larger number of credit card holders, around 4.1m
were sold the CPP product by their banks. If each of the banks’ customers were
to get the same level of redress, around £48, the industry could be facing a
£200m bill.
CPP’s business partners include Royal Bank of Scotland, Standard Chartered,
Yorkshire Bank, Barclays and HSBC. It is not certain that all the banks will be
involved in compensation talks with the FSA.
CCP agreed the fine and compensation agreement following an 18-month
investigation by the Financial Services Authority.
The fine relates to “widespread mis-selling of CPP's two main [credit card
insurance] products” between January 2005 and March 2011.
Tracey McDermott, the FSA’s director of enforcement and financial crime,
said: “This is a serious case, one that has warranted our joint largest retail
conduct fine and generated a sizeable bill for consumer redress.
“While CPP’s products were relatively inexpensive, they were sold widely and CPP encouraged its sales agents to be overly persistent.
This exposed a very large number of customers to the unacceptable risk of buying products they did not want or need.”
CPP’s shares, which have fallen from a high of over 300p in March 2011 to less than 30p were up 17pc in earlier trading.
CPP chairman Charles Gregson said: “The board clearly recognises the seriousness of past failings identified by the FSA in its investigation of historic practices in the UK business, and is deeply sorry for any customer detriment that may have occurred.
“A great deal has been done to improve governance, compliance and risk management capabilities throughout the Group. The Board is pleased with the progress being made by the new executive leadership team on deploying the new, customer-led, strategy as we rebuild the business for the future.”
“While CPP’s products were relatively inexpensive, they were sold widely and CPP encouraged its sales agents to be overly persistent.
This exposed a very large number of customers to the unacceptable risk of buying products they did not want or need.”
CPP’s shares, which have fallen from a high of over 300p in March 2011 to less than 30p were up 17pc in earlier trading.
CPP chairman Charles Gregson said: “The board clearly recognises the seriousness of past failings identified by the FSA in its investigation of historic practices in the UK business, and is deeply sorry for any customer detriment that may have occurred.
“A great deal has been done to improve governance, compliance and risk management capabilities throughout the Group. The Board is pleased with the progress being made by the new executive leadership team on deploying the new, customer-led, strategy as we rebuild the business for the future.”
Great article about another misselling scandal.
ReplyDeleteI am looking to claim back this.
I bought my CPP direct from the banks..
Having read this article it looks like the banks are about to be fined too.
http://emailwire.com/release/112570-HighStreet-Banks-Face-Financial-Exposure-To-The-CPP-MisSelling-Scandal.html