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- Bank sold protection policies for fraudulent transactions on stolen cards
- But banks are already obliged to compensate customers for fraud
- Fears it could spell trouble for the taxpayer as Lloyds is state-backed
Lloyds could be hit with another multi-million-pound compensation bill over fears that it mis-sold worthless insurance to thousands of its credit-card customers. For years, the state-backed bank sold protection policies that promised to reimburse customers for fraudulent transactions if their cards were lost or stolen. But the insurance – provided by the US firm Affinion – was worthless as banks are already obliged to compensate customers for fraud.
The case has echoes of the scandal involving a British credit-card insurer called CPP, used by High Street lenders including Royal Bank of Scotland, HSBC, Barclays and Santander. This week the Financial Conduct Authority announced that 7million of their customers would soon receive forms to claim a share of up to £1.3billion in compensation. Customers, who typically paid £30 to £80 a year for fraud-protection policies, will receive their money back plus interest. Lloyds distanced itself from the scandal, saying only its subsidiary Bank of Scotland used CPP. But it has emerged that the rest of the group, including Halifax and Lloyds TSB, sold similar policies provided by Affinion until May 2012.....Read more here