Breakdown firms to spend £15m in compensation for customers with duplicate cover

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The AA and RAC are setting aside £15 million in compensation payments after it emerged that customers had bought duplicate cover.

According to The Times, the AA yesterday said that it would contact the 17,000 customers who bought duplicate cover when they started current accounts with Lloyds Bank and TSB.


The newspaper also reported that the RAC had set aside £5 million for a so-called "correction programme" for customers who had bought duplicate cover. The AA has apparently said the move will cost £10 million.

The news comes as the AA has made wholesale changes to its pension scheme. The same newspaper reported that the original final-salary scheme is being scrapped after the shortfall rose to £395 million.

Long-serving staff will be moved onto a less generous scheme based on average salaries throughout a career.

Even so, the organisation announced that its pre-tax profits had risen to £100 million – up from £9 million previously – and that there was a three per cent rise in total dividend.

According to The Daily Telegraph, the AA's executive chairman, Bob Mackenzie, said the company was building a firm platform for sustainable growth after under-investment from previous owners.