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Two million offered credit card insurance compensation


Two million customers will be offered compensation from their banks for being sold insurance policies they didn’t need, covering the loss or theft of their bank cards.

Banks and credit card issuers have been told by the Financial Conduct Authority (FCA) that they must send a letter to customers who were affected, asking them if they would like compensation. These letters will be sent out in April and May, and if the scheme is approved the customers could receive several hundred pounds.

The insurance polices were run by a company called Affinion and sold by the banks and credit card firms. The names the policies were sold under were Card Protection, Sentinel, Sentinel Gold, Sentinel Protection, Sentinel Excel and Safe and Secure Plus.

The insurance covered loss over use of a card that had been lost or stolen, but the FCA said:
"This was unnecessary because the customer's card issuer was typically responsible for any transactions after the cards were reported as being lost or stolen and, in the period before reporting the matter, customers were only liable for unauthorised transactions in limited circumstances," the regulator said.

"The bank or card issuer usually covered customers for anything over the first £50 if transactions took place before the card was reported missing."
The policies cost on average £25 a year and the compensation will accrue interest of 8% a year, minus any taxes and any money actually paid out on successful claims. This means that some individuals may be eligible for a refund of more than £300.

The FCA pointed out that the scheme would not cover bank customers who had a card insurance policy as part of a packaged bank account.

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