Banking StandardsLetter from Lloyds Banking Group
Thank you for your letter dated 28 February 2013 to Antonio Horta-Osorio, who has passed this onto me to respond, as Group Director of Retail. I am pleased to provide the answer to the question from Lord McFall.
Firstly let me clarify the circumstances under which Sentinel Card Protection (“CP”) product has been sold to our customers and the fees charged. The CP product forms part of the range of benefits offered by our Lloyds TSB AVA packaged accounts, along with other benefits such as travel insurance, mobile phone insurance and AA Breakdown cover. The fee charged for our AVA account varies from £9.95 to £25 per month depending on the type of product the customer chooses. Also, up until 31 January 2012 customers could purchase a standalone version of the CP product when they applied for a credit card. The cost of this product was £30 for one year’s cover and £70 for three years.
We entered in to an agreement to sell Sentinel CP because the product offers a range of benefits that we believe satisfy the needs of a broad section of our customers. The key benefit of the Sentinel CP product is the 24 hour card cancellation service. Policy holders can cancel all their credit and debit cards with a single telephone call should they lose or have them stolen. Also, replacement cards are ordered straight away, to limit the amount of time customers are inconvenienced by their loss. This service removes the need for customers with a number of different cards to have to contact each individual card issuer. Other benefits included in the cost of the Sentinel CP product are personal belongings and money insurances. Customers can claim on these insurances for a replacement bag or wallet and money contained within them, should these items be lost or stolen along with their cards.
Every year there are a significant number of customers who use the service offered by their Sentinel CP policy, and a number go on to make an insurance claim. Only a small proportion of the fee for Sentinel CP covers the cost of insurance related benefits, one of which was fraud cover.
With specific regard to fraud cover, we acted last year to remove this feature from our CP products. We also attempted to remove all references from CP product literature, websites and any other customer facing materials. Unfortunately, due to an oversight, the page referred to in Lord McFall’s question, hosted by a 3rd party supplier, was missed from the removal process. This page was not directly accessible from the Lloyds TSB website. It would not have been possible for a customer to purchase Sentinel CP directly from the link; if a customer had followed up with us, or with the Sentinel CP supplier directly, then from the 24 March 2012 (when literature was updated), they would not have received any product literature that featured this element of fraud cover. The page in question has now been removed by the supplier and further checks have taken place to ensure no further references exist, either on our own or any other 3rd party supplier’s website.
I hope the above clarifies that we offered Sentinel CP to our customers to meet a number of their needs, and also that the changes we have made to the CP product are in line with customers liability for fraudulent activity, referred to by Lord McFall. If you have any further questions then please do not hesitate to contact me.
18 March 2013