Those who bought certain card security products have eight weeks left to make a claim under a compensation scheme set up with the agreement of the Financial Conduct Authority. Anyone who received an AI Scheme Limited compensation claim pack in the post in August or September last year who wishes to claim compensation must return their completed form before the deadline of 18 March 2016.
The scheme, AI Scheme Limited, was voluntarily set up by Affinion International Limited and 11 card issuers to provide redress to those who bought the products, which included insurance to cover fraudulent use if a card was lost or stolen. This was in certain respects unnecessary because the customer’s bank or card issuer was typically responsible for any transactions after the cards were reported as lost or stolen and, before reporting the matter, customers were only liable for unauthorised transactions in limited circumstances.
Commenting on the approaching closure of the AI Scheme, Jonathan Davidson, director of supervision, retail and authorisations, at the FCA, said:
'The FCA has worked closely with Affinion International Limited, and banks and card providers, to set up this consumer redress scheme. This is a straightforward process. Those with concerns about these products can make a compensation claim receive redress by simply completing and returning the short form that was sent out to them last summer. Any such compensation claims must however be made by 18 March 2016 so customers should not delay.
'This simple and transparent compensation scheme applies whether customers bought the card security product from a bank, card provider, or from Affinion International Limited.
'If you think you bought one of these products and don’t have a form or you’ve mislaid it, you should contact the AI Scheme helpline on 0800 678 1930 to check whether you’re eligible to claim and to request a replacement pack.'
People with the following card security products, who were contacted by AI Scheme Ltd, have eight weeks to submit their compensation claim forms:
- Card Protection
- Sentinel
- Sentinel Gold
- Sentinel Protection
- Sentinel Excel
- Safe and Secure Plus
Compensation claim forms must be received no later than 18 March 2016. Forms received after this date will not be considered so it is important that people who wish to seek compensation do so without delay. The FCA recommends that completed claim forms are posted well before the deadline.
What product holders should do next
Eligible product holders have until 18 March 2016 under the AI Scheme to return their completed compensation claim forms. They must use the original form they were sent by AI Scheme Limited; photocopies will not be accepted. A freepost envelope was provided.
Approximately 173,000 people who voted for the AI Scheme had not returned a completed compensation claim form in the first four months of this compensation scheme, so they are being sent reminder letters.
Current policyholders who are yet to act will need to think carefully about whether they want to retain the card security product as any compensation payment will result in cancellation of their existing policy.
Further information for affected customers and detailed answers to frequently asked questions[1] are available on a website set up by AI Scheme Limited.
Individual compensation payments will depend on the length of time the customer had the card security product. The card security product cost about £25 a year. The average compensation payment per customer is £180.
Notes for editors
- The AI Scheme helpline can be contacted on 0800 678 1930 and from outside the UK on +44 208 475 3103, but calls to this number may incur a charge.
- One of the features of the card security products was insurance to cover fraudulent use if a card was lost or stolen. This was in certain respects unnecessary because the customer’s bank or card issuer was typically responsible for any transactions after the cards were reported as lost or stolen and, before reporting the matter, customers were only liable for unauthorised transactions in limited circumstances. 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 AI Scheme has also been designed to deal with any other concerns that product holders may have with the way in which a card security product was sold to them.
- The FCA has not conducted a formal investigation into this matter. Affinion and the following high street banks and credit card issuers have voluntarily agreed to be part of the AI Scheme and will provide the required funding for the compensation payments:
- AIB Group (UK) Plc trading as First Trust Bank in Northern Ireland and Allied Irish Bank (GB) in Great Britain
- Barclays Bank Plc
- Capital One (Europe) Plc
- Clydesdale Bank PLC
- HSBC Bank plc
- Lloyds Bank Plc
- Northern Bank Limited trading as Danske Bank
- Santander UK plc
- Tesco Personal Finance plc
- The Co-operative Bank Plc
- The Royal Bank of Scotland plc
- A Scheme of Arrangement (“Scheme”) is an arrangement between a company and its creditors and can help with the re-organisation of a company’s finances. The Scheme has to be approved by the High Court, and requires the consent of a majority of creditors (by number) and 75% by value of creditors that vote.
- The total amount of compensation paid under the AI Scheme will depend on the number of valid claims received, and the extent to which existing product holders value the benefits from the product.
- The FCA has used its powers to bind the Financial Ombudsman Service (FOS) to the AI Scheme. This means that consumers who are eligible for the Scheme can complain to the FOS, but the FOS can only assess their claims, and award compensation by using the rules of the Scheme. Therefore consumers who complain to the FOS should be put in the same position as if they had made a claim though the Scheme.
- Previous press release: Consumer redress scheme opens – card security product holders have until March 2016 to claim compensation[2] (18 August 2015)
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[3].