BRITAIN’S biggest banks are braced for another compensation bill with regulators today expected to tell them to pay up to £1.5bn for consumers wrongly sold credit card protection from insurer CPP.
The settlement will repay customers who bought insurance through the group from 2005 onwards, and includes those who wrongly thought they were buying identity theft protection, as well as unnecessarily buying cover in case of fraudulent use of credit cards.
All the big four lenders are thought to be affected, though to varying extents as not all banks used the CPP’s services for the whole period covered by the deal.
Another handful of smaller names are also likely to be included in the settlement.
The CPP compensation scheme, first reported last night by Sky News, will also require customers to vote in favour of the payouts.
City watchdog the Financial Conduct Authority is likely to unveil the plan alongside CPP’s financial results this morning.
The charge comes on top of payment protection insurance redress bills of more than £17bn, as well as several billion more for interest rate swap misselling.
The sector had struggled to come to terms with the tougher stance taken by regulators on selling.
Practices which were deemed suitable a decade ago are now out of favour, leading to the PPI compensation payouts.
In the PPI case, banks initially opposed compensation cases and failed to agree a straightforward redress system.
As a result they and the FCA head Martin Wheatley have worked to settle claims quickly to prevent cases like swaps mis-selling dragging on, as well as looking to pre-emptively prevent similar scandals arising in future.