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​$2 bln compensation closer for 7 million victims of mis-selling

Published time: January 10, 2014 14:20
AFP Photo / Damien Meyer

AFP Photo / Damien Meyer

Clients mislead by 13 of Britain’s biggest banks and credit card insurer CPP have agreed a proposed reimbursement scheme, which means the estimated seven million customers should get a share of a $2 billion in compensation by the spring.

CPP said 98 percent of customers involved gave a green light to the scheme it proposed in late August, according to the Daily Mail.

This marked the second stage in resolving the mis-selling scandal that lasted from 2005 to 2011. The next and the last step would be approval by the High Court, with the first compensation payments expected in the spring.

Brent Escott, the CPP chief executive said: "A key priority is to achieve the best outcome for customers affected by the historical issues in the UK, business and customer approval for the scheme marks a further step forward in this process."

The insurance company CPP Group is accused of ‘greatly exaggerating’ the risk of identity theft in order to sell coverage customers didn’t actually need through high street banks.

Once the scheme is finalized, eligible customers will be sent a form to apply for compensation of up to $500. CPP contracts cost up to $130 a year.

In November 2012 CPP was fined $17 million after regulators ruled it had given misleading and unclear information about credit card and identity theft insurance. It was the largest retail fine ever charged by Financial Services Authority.

The insurance company has set aside around $110 million in order to pay for compensation claims, the rest will be paid by banks or card issuers.