£1.3bn payout for mis-sold policies

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Visa cards on a calculatorAround seven million people are set to share up to £1.3 billion in compensation after 13 high street banks and credit card companies agreed to offer redress for mis-sold credit card and identity theft protection.

The Financial Conduct Authority (FCA) said banks and credit card firms, together with card insurer CPP Group, have agreed to a compensation package which will see millions of customers contacted by CPP.

Major lenders including Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group have signed up to the compensation scheme, which is the latest blow to the banking industry after the multibillion-pound payment protection insurance (PPI) scandal.

The scandal involved 23 million policies and saw customers given misleading and unclear information about the insurance.

CPP has already been fined a joint record £10.5 million by the City watchdog.