Creditors vote in favour of CPP compensation scheme
12:26pm Thursday 9th January 2014
CUSTOMERS who were mis-sold insurance by York-based CPP have voted in favour of accepting a multi billion pound compensation scheme.
A creditors meeting was held at Wembley Arena on Tuesday where customers who were sold or renewed a policy since January 2005 were give the chance to vote on whether to accept a redress scheme.
Votes were cast by 18 per cent of those eligible to vote and of those, 98 per cent of votes were in favour of the scheme.
The scheme will now proceed to the High Court for approval, with a hearing date of January 14. If approval is granted compensation payments will begin in the Spring.
Announcing the vote results today Brent Escott, group chief executive, said: "A key priority is to achieve the best outcome for customers affected by the historical issues in the UK business and customer approval for the scheme marks a further step forward in this process.
“While the group will continue to face significant risks and uncertainties in the short to medium term, we continue to work closely with our stakeholders to complete the scheme and provide a stable platform from which the business can look forward.”
CPP Group, which has its headquarters in Holgate where it employs 600 staff, announced last month that is had increased its provision for customer redress and associated costs to £65.8 million, reflecting a proportionately higher level of votes from the scheme creditors for whom CPP is directly responsible.
However CPP has stated the actual pay-out may be higher or lower depending on how many customers will respond during the claims process.
If the High Court grants approval CPP will join 13 high streets banks in paying an estimated £1.3 billion compensation as part of the scheme.
After fining CPP a record £10.5 million in November 2012 for mis-selling insurance products, the Financial Conduct Authority revealed in August last year a redress scheme in which banks and financial institutions, along with CPP, will pay compensation to as many as seven million people in the UK who were sold policies between 2005 and 2011.
The banks and credit card issuers set to join CPP in the redress scheme are Bank of Scotland, Barclays, Canada Square Operations, Capital One (Europe), Clydesdale Bank, Home Retail Group Insurance Services, HSBC, MBNA, Morgan Stanley, Nationwide Building Society, Santander UK, The Royal Bank of Scotland and Tesco Personal Finance.