Tempe, AZ -- (SBWIRE) -- 01/30/2013 -- Yet again the troubled financial services sector is faced with another mis-selling scandal.
An FSA investigation in 2012 revealed that Card Protection Plan Ltd (CPP) has generated millions of pounds in profit for selling insurance for a risk that simply does not exist.
CPP Ltd were fined £10.5 million in 2012 for their involvement which was the 4th biggest fine to-date made by the FSA.
It has been suggested that 4.4 million people may have been mis-sold ‘Card Protection’ and ‘Identity Theft Insurance’ by CPP or direct through their bank.
The FSA is now looking into the banks involvement in this latest mis-selling fiasco and it’s predicted that the total number of consumers affected could be on the same scale as the PPI mis-selling scandal.
The FSA investigation found that consumers who took these insurance policies directly from CPP Ltd were subjected to high pressure selling tactics by over-eager and commission orientated sales staff.
CPP also made it extremely difficult for existing customers to actually cancel their policies later on.
The FSA uncovered the fact that in many cases, the Card Protection and Identity Protection plans were not needed. This is due to the fact that the statutory protection is already in place for victims of fraudulent card transactions and identity theft.
The Financial Services Authority stated in their report that CPP Ltd generated £354.5 million in gross profit. 18.7 million renewals added £656.5 million more to the company’s earnings.
This income was made up from the selling of Card Protection which typically cost customers £35 per year and Identity Theft insurance which costs approximately £84 per year.
Each insurance policy offered various features and benefits, but under UK law, several of these features are simply protecting against risks that do not exist.
The products themselves were not the only area where the FSA found a cause for concern. CPP and the high-street banks have also been reprimanded for their sales practices.
In some cases, in order to activate a new credit card, customers were advised to call a phone number via a sticker attached to the new card. At which point they were connected directly to the telesales department of CPP who attempted to sell them Card Protection and Identity Protection insurance policies.
The sales process was supposed to be ‘non-advised’. They should not have directly recommended CPP’s insurance products for the specific perceived risks discussed.
The sales team at CPP were given a sales script which advised them how to handle objections by playing on the customer’s fears and concerns by over-emphasizing the risks.
More often than not this was done using statistics that were totally fabricated.
The FSA even found serious misrepresentation within the welcome pack sent out to new customers.
Perhaps the most concerning element of the mis-selling scandal applies to customers who registered multiple cards with CPP’s Card Protection Insurance. A benefit of this insurance allowed the customer to cancel all of their cards from multiple providers with a single call to CPP. The small print actually gave CPP access to use any of the cards being protected to be used as payment for the insurance premiums.
With this in mind, a customer that was in serious financial troubles who had one of their credit cards frozen by a bank, would still have payments taken off them by CPP on one of their other cards on the policy.
Customers who thought they had cancelled the original card protection, still continued to have the insurance payments debited from their other cards within the policy, without their prior knowledge.
For those who have been paying CPP Ltd or their Bank for Card Protection and Identity Theft, there is now a specialist CPP claims company set up called CPPClaims.com which has been established to help those affected get back all of the CPP payments plus additional compensation.
Interested participants can call them on free phone 0800 689 0389. Or for more information visit http://CPPClaims.com
CPPClaims.com specializes in helping people understand their options for reclaiming any out-of-pocket funds that have been paid to CPP Ltd or their bank, for mis-sold CPP Card Protection and Identity Theft Insurance. They offer a free review of cases and can help participants claim compensation as well as getting back all of the payments made to CPP Ltd or their Bank.