Banks forced to repay millions for mis-sold card protection scheme

Paul Lewis / 16 February 2015

If you receive a letter about Sentinel or Affinion card protection, don't throw it away. You could be able to claim back hundreds of pounds if you were mis-sold a card security product. Paul Lewis explains what you should do next.



If you get a letter from AI Scheme Limited about compensation for a card security product, do not assume it is junk mail or throw it away. It could be worth hundreds of pounds.

The letter is about compensation for insurance which was supposed to protect you from financial loss if your credit or debit card was stolen or misused.

What was the insurance for?

It would reimburse you for any money spent on the card after it was lost, even though the banks selling the insurance knew perfectly well that they would bear any loss after you told them you had lost your card. They would never charge you more than £50 of any money stolen before they were notified – and even that amount was usually waived. So this insurance was useless and should never have been sold.

It was marketed by Affinion International through almost all the major High Street banks, as well as Capital One. The firms have all agreed to reimburse customers for the premiums they should never have paid.

It cost around £25 per card per year and the mis-selling went on for more than eight years. With 8% interest on the amounts, the total for many customers could be hundreds of pounds.

But claiming it is being made difficult. For legal reasons it is in several stages.

Should you accept PPI compensation?

How to claim

First, the compensation scheme has to be agreed by a majority of the people affected. A voting pack will be sent out in May and you will be invited to vote on it by 23 June. If a majority of those voting say ‘yes’, the court will then approve the scheme.

A further letter will be sent in July/August with a claim form which will have to be returned by a deadline. Only after that will compensation be paid.

When you get the letter keep it in a safe place. If you are changing your address, let the scheme know.

Who does this affect?

If you bought or renewed this insurance from a bank, credit card provider, or Affinion International between 14 January 2005 and August 2013 and have not received a letter about compensation by the end of February, contact the scheme. The brands covered are Card Protection, Sentinel, Sentinel Gold, Sentinel Protection, Sentinel Excel, and Safe and Secure Plus.

A similar scheme for a mis-sold product by another insurer called CPP resulted in barely a third of the people involved ever being paid. So, if you get a letter headed AI Scheme Limited about compensation, keep it safe and wait for the next letter in May.

If you don’t get a letter but think you should have, then find out why by calling the scheme helpline on 0800 678 1930 or 0208 475 3103.

More information is available from the scheme and the regulator.

 

Paul Lewis writes a money column for Saga magazine. 

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.