Banks Forced to Pay Compensation in ID Theft Mis-Selling Scandal

03 Oct 2014
HomeNews StoriesBanks Forced to Pay Compensation in ID Theft Mis-Selling Scandal

UK banks have become involved in a new mis-selling scandal, this time relating to the unnecessary selling of insurance for ID theft and credit card fraud. It is thought it could cost the financial institutions involved up to £1.3 billion, as reported by the Financial Times.

The Financial Conduct Authority (FCA) recently unveiled the plan, which will affect 16 institutions, including many of the big high-street banks.

The company CPP, which is based in York, is at the centre of the problem. It is accused of selling insurance policies to individuals when banks already provided the policies automatically through covering the costs incurred by the victims as a result of fraud. Over four million policies were sold, many through high-street bank referrals.

Customers could get compensation if they were misled or given unclear information about the products. It is feared that the risks of ID theft may have been exaggerated to customers in order to sell more products.

Despite the potential mis-selling of the insurance policies, ID theft is still a real risk. It is one of the fastest-growing frauds in the UK, and it is by no way a victimless crime. Rather than taking out insurance, you can protect yourself by taking more care with what information you post online on social media profiles, and also through destroying documents that contain sensitive data such as bank statements rather than throwing them in the bin.


Image courtesy of James Barker /