Thousands set to get refunds for insurance sold with credit cards
Thousands of people are in line for a refund windfall after they were mis-sold an insurance product for their credit cards.
Up to 160,000 people could be in line for refunds of up to €300 each, with banks and card providers currently sending out letters and claims forms to people who took out the credit card protection policies.
The refunds process can go back to policies sold as long as nine years ago, the Central Bank has confirmed.
This is in contrast to complaints made to the Financial Services Ombudsman, which is bound by the statutory six-year rule.
Banking experts said the policies were sold by Bank of Ireland, MBNA (now called Avantcard) and Ulster Bank. These institutions could have to pay out between €15m and €30m to customers. They have been ordered by the Central Bank to contact those who bought the cover.
Consumers in line for refunds bought an optional policy known as card protection. This is to cover policyholders in the event of credit card loss or fraud.
Director of consumer protection in the Central Bank Bernard Sheridan told the Irish Independent: "We would urge people to read the letters they get from the institutions. If they purchased cover they did not need, they should claim."
The policies were sold on the Irish market from the 1990s by Homecare Insurance Ltd, a subsidiary of the British CPP group.
They offered protection for unauthorised transactions on a card, while covering the cost of replacement locks and keys if house keys are lost or stolen, and the replacement of a lost handbag or wallet.
But regulators have decided that these policies were mis-sold, as those who bought it were not aware the credit card provider is responsible for any transactions after you inform them that your card has been lost or stolen.
A Central Bank spokeswoman said: "The product included a small element of cover that customers did not need and could not claim on."
The regulators here have ordered a redress scheme that will offer customers the choice of making a claim for the amount of policy premium paid since August 1, 2006. A similar redress scheme is happening in the UK.
The Central Bank can go back to 2006 as it was when rules outlined in the Consumer Protection Code came into force.
It has requested finance firms that sold the product to refund premiums, and pay compensatory interest, less any amounts paid out for a claim on the policy.
As the average annual premium was about €30 a year, people could be in line for a payout of up to €270. Credit card providers who offered the product are sending out letters to customers letting them know about claims process.
The latest refunds process comes after the Central Bank ordered 11 institutions, including banks and card providers, to pay back almost €70m to 77,000 policyholders who were sold payment protection insurance since July 2007.