The City watchdog has fined credit card insurer CPP £10.5 million for the widespread mis-selling of insurance products.
The Financial Services Authority (FSA) said the penalty was the joint largest retail fine it has handed down, and CPP has also agreed to pay redress and estimates that around £14.5m will need to be paid to affected customers, “but this could change depending on how many customers respond to CPP’s contact exercise”.
CPP has estimated that the total costs of the FSA’s investigation will be £33.4m, which includes the fine, redress and the costs associated with the investigation.
The FSA said it found widespread mis-selling of CPP’s two main UK products between January 2005 and March 2011, the firm failed to treat its customers fairly and did not provide clear information to its customers.
It said CPP sold its Card Protection product by emphasising that customers would benefit from up to £100,000 worth of insurance cover, when this was not needed because customers were already covered by their banks. The firm also overstated the risks and consequences of identity theft during sales of its Identity Protection product.
Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “This is a serious case, one that has warranted our joint largest retail conduct fine and generated a sizeable bill for consumer redress.”
CPP chief executive Paul Stobart said: “We are deeply sorry for the errors and wrongdoings of the past and are paying a heavy penalty through what is a large fine.”
Today’s fine matches the £10.5m penalty handed to HSBC in December 2011 after one of the bank’s subsidiaries provided inappropriate investment advice to elderly customers.