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Two million bank customers will be able to claim compensation for being sold unnecessary insurance policies covering the loss or theft of their bank cards.
The plan has been agreed by the Financial Conduct Authority (FCA) and 11 banks and credit card issuers.
Affected customers will be sent a letter in April or May, asking them to vote in favour of the compensation scheme.
If the scheme is approved the customers could receive several hundred pounds.
The problem was with insurance policies run by a company called Affinion and sold by the banks and credit card firms.
The policies went under the names such as Card Protection, Sentinel, Sentinel Gold, Sentinel Protection, Sentinel Excel and Safe and Secure Plus.
The FCA explained that one element of the insurance covered losses due to the fraudulent use of a card that had been lost or stolen.
"This was unnecessary because the customer's card issuer was typically responsible for any transactions after the cards were reported as being lost or stolen and, in the period before reporting the matter, customers were only liable for unauthorised transactions in limited circumstances," the regulator said.
"The bank or card issuer usually covered customers for anything over the first £50 if transactions took place before the card was reported missing."CPP and mis-selling Swiss Replica Watches
The plan to compensate Affinion customers follows a similar but much larger exercise involving seven million people who had been mis-sold similar card and identity protection policies by a company called CPP.
If all those customers had claimed they would have been in line for compensation amounting to £1.3bn.
Payments were made last year with an August deadline for claims.
CPP was fined £10.5m in 2012 by the FCA's predecessor, the Financial Services Authority (FSA), because it was found to have used deliberate mis-selling tactics to bamboozle people into thinking they needed the insurance cover.
In the case of Affinion though, there has been no formal FCA investigation, nor any finding of wrong-doing.
Tracey McDermott, director of supervision and authorisations at the FCA, said: "We have been encouraged that, working closely with the FCA, a large number of firms have voluntarily come together to create a redress scheme that will provide a fair outcome for customers."The compensation process
Customers who have bought this card insurance anytime between January 2005 and August 2013 will receive an initial letter soon from a company called AI Scheme Limited, which has been set up to administer the compensation.
A formal vote on whether or not the compensation scheme should go ahead is required, and will take place in April or May.
Assuming there is a yes vote, customers will then be able to claim their compensation by sending in a form.
It is not known how many will eventually claim, or how much they will be due.
But the policies cost on average £25 a year and the compensation will accrue interest of 8% a year, minus any taxes and any money actually paid out on successful claims.
Therefore some individuals may be eligible for a refund of more than £300.
The 11 banks and card issuers involved are:
"If approved, this scheme will provide those who may have concerns about the way their card security product was sold to them with a simple and free way to claim compensation," said Ms McDermott.
The FCA pointed out that the scheme would not cover bank customers who had a card insurance policy as part of a packaged bank account.