UK Banks to Pay $2 Billion to Settle Credit Card Scandal
Thirteen banks and credit card companies in the United Kingdom are on the line for an estimated £1.3 billion ($2.02 billion in US dollars) in damages over the next few months. This is the result of a mis-selling scandal regarding credit card insurance that has affected more than 7 million people.
Victims of the scandal purchased identity theft protection programs under false information about the protection they would receive. The credit card companies behind the programs are taking responsibility for the mis-sold policies, and they are expected to pay approximately £185 per person starting next spring.
The Financial Conduct Authority is in charge of the compensation package, and they say the redress per customer depends on the type of policy (or policies) owned and the length of time it was held.
The redress program has to be approved by both the customers and high court before it can officially go into action, but regulators predict it will happen without a fight.
The 13 banks included in the compensation include Bank of Scotland (part of Lloyds Banking Group), Barclays, Canada Square Operations (formerly Egg), Capital One, Clydesdale Bank, Home Retail Group Insurance Services, HSBC, MBNA, Morgan Stanley, Nationwide building society, Santander, RBS and Tesco Personal Finance.
The compensation will be open to anyone who bought an insurance plan from these card companies after January 14, 2005.