Herbert Smith Freehills (HSF) and Linklaters have taken lead roles on the scheme of arrangement designed to compensate consumers who had been missold protection for credit card theft and identity fraud.
HSF restructuring partner Kevin Pullen led the firm’s team acting for Card Protection Plan Limited (CPPL) on the scheme of arrangement which is to be used as a means of paying redress to eligible customers who purchased certain of the company’s products.
Corporate partner Greg Mulley, finance partners Simon Chadney and Laurence Elliott, and regulatory partner Jenny Stainsby have also been involved in the work. HSF was first instructed in May 2012 and has advised the CPP group on a range of corporate, finance, regulatory and restructuring matters.
Meanwhile Linklaters has acted for banks and credit card issuers involved, with the team led by banking partner Robert Elliott alongside fellow partners Carl Fernandes, Bruce Bell and Nick Le Masurier.
The FSA began an investigation into CPPL in May 2011 over potential misselling of products, and the company then agreed to carry out a past business review to contact and offer redress to customers who had suffered loss as a result of a sale or renewal of a card protection product sold directly by CPPL after January 2005 or an identity protection product sold directly by CPPL through a telephone sales channel.
The company then agreed to extend the business review to cover sales of a card protection product by banks and credit card issuers directly, and also where a business partner had introduced a customer to CPPL through a telephone sale. HSF advised on the structuring and implementation of a solvent scheme of arrangement for the redresss programme.
CPPL was also fined £10.5m for misselling last year.
The Financial Conduct Authority, which used an in-house team on the deal, said yesterday that around 7m consumers could be affected and the bill could be up to £1.3bn.
The banks and credit card issuers involved, which will provide the money for compensation, are: the Bank of Scotland, Barclays, Canada Square Operations (formerly Egg Banking), Capital One, Clydesdale Bank, Home Retail Group Insurance Services, HSBC, MBNA, Morgan Stanley Bank International, Nationwide Building Society, Santander UK, the Royal Bank of Scotland and Tesco Personal Finance.