A new compensation scheme could soon be launched to reimburse consumers who were sold credit card security policies by a company called Affinion International Ltd. The policies claimed to provide protection if the card was lost or stolen, by reimbursing consumers for any fraudulent transactions that were made using the card.
However, unless the bank or card issuer can prove that the consumer has been grossly negligent, they’re legally obliged to cover any losses over £50 anyway – rendering these so-called security policies completely worthless. So news of a compensation scheme will be music to the ears of many consumers who find it hard enough to repay their debts without the added pressure of security policy premiums that don’t actually provide any protection.
The security policies and the AI Scheme
Affinion sold policies to around two million people between January 2005 and August 2013 under the names Card Protection, Sentinel, Sentinel Gold, Sentinel Protection, Sentinel Excel, and Safe and Secure Plus. The products were sold to customers of 11 high street banks and credit card providers: AIB Group, Barclays, Capital One, Clydesdale, HSBC, Lloyds, Santander, Northern Bank Ltd, Tesco Personal Finance, The Co-operative Bank and the Royal Bank of Scotland.
So with a typical cost of £25 per year, customers will be able to claim back up to £250 worth of premiums, plus interest at 8%. However, the AI Scheme which will provide the compensation, will only go ahead if customers vote in its favour. The Scheme has already started contacting customers and will send out a letter in April or May 2015 inviting people to vote for or against the scheme. The letter will also explain how to vote and provide further details.
The potential launch of the AI Scheme has been announced by the Financial Conduct Authority (FCA), which has been working closely with Affinion and the 11 banks and credit providers to agree on how to compensate customers. The agreement is voluntary and doesn’t follow a formal investigation by the FCA or indicate that the providers have done anything wrong.
Tracey McDermott, Director of Supervision and Authorisations at the FCA, comments: ‘If approved, this scheme will provide those who may have concerns about the way their card security product was sold to them with a simple and free way to claim compensation. We have been encouraged that, working closely with the FCA, a large number of firms have voluntarily come together to create a redress scheme that will provide a fair outcome for customers.’
Have you been sold an Affinion security policy?
If you were sold any of the policies listed above between January 2005 and August 2013, you may be eligible for compensation under the AI Scheme*. If this is the case, you don’t need to do anything until you receive the letter inviting you to vote for or against the scheme.
Andy Gorton, Managing Director of debt advice firm, Fresh Finance says: ‘The amounts involved in this compensation scheme aren’t huge, but they could make a difference if you’re struggling with debts or the everyday cost of living. So if you receive a letter from the AI Scheme, I would advise you to vote in favour of the scheme and give yourself the chance to reclaim your premiums plus interest. The letter will also provide details of a dedicated phone helpline and website if you’d like more information about the scheme.’
If enough consumers vote in favour of the AI Scheme and it goes ahead, the FCA expects compensation payments to be made towards the end of 2015.
About Fresh Finance Ltd
As our name suggests, Fresh Finance is here to help you make a fresh financial start. Our aim is to help you find the right way to tackle your debt problems, so you can get your finances back under control and move on with your life. Our friendly, qualified advisers will take some details about your debts and other financial circumstances before referring you to the expert team at our partner debt management firm, Money Solve Ltd.
Money Solve Ltd will talk through the debt solutions that are available to you and help you decide on a way forward. These might include an informal Debt Management Plan, a legally-binding Individual Voluntary Arrangement, bankruptcy or a different option. Whichever path you choose, Money Solve will be there to guide you through the process step by step.
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* The AI Scheme won’t cover anyone who had a card security policy as part of a packaged bank account.