Compensation for 2 million

Two million people who were sold unnecessary card protection policies will be able to claim compensation from later this month.

Some will have paid £25 a year for the policies for as many as ten years. So, including interest, they could receive up to £270 each.

The compensation scheme is being financed by 11 top banks and credit card companies, whose customers bought card protection under a stable of brands from Affinion International Limited - brands including Sentinel, Safe and Secure Plus and Card Protection.

The policies offered protection against fraudulent use of a card if it was lost or stolen. But card providers would normally have covered most or all of the losses in any case.

The millions affected will be sent claim forms from later this month, with the first payments made in September.

The Financial Conduct Authority announced in January that there would be a compensation scheme.

Millions of pounds for card users

Two million people are being sent letters to tell them they could qualify for compensation for credit and debit card protection policies sold to them by their banks.

The policies promised to protect customers against losses if thieves used their cards, but such losses were likely to have been covered by the bank anyway.

Customers spent an average of £25 a year on policies including Card Protection, Sentinel and Safe and Secure Plus.

The period covered by the compensation is between January 2005 and August 2013, so it could stretch to nearly 9 years.

The refunds could add up to hundreds of pounds in some cases, including interest at 8 per cent.

The letters are being sent by a special company set up by banks, credit card companies and a US firm called Affinion which provided the insurance.

The Financial Conduct Authority is not accusing them of mis-selling. It says some features of the policies could be useful.

Customers will have to vote on the scheme which will then need High Court approval before payments are sent out in the autumn.