More than 300,000 shoppers with catalogue brands Ace and Studio are in line for refunds after they were flogged near-useless accidental damage and theft cover for their clothing purchases.
Parent firm Express Gifts Ltd has agreed to repay £12.5 million to about 330,000 customers – amounting to an average payout of £38 each – after regulator the Financial Conduct Authority (FCA) found the insurance products offered customers "little or no value".
Sold between January 2005 and May 2015, the policy covered customers against accidental damage and theft for all products they purchased from the Ace or Studio brands, with the cost of the cover calculated as a percentage of the customers' account balances. This type of cover has now been withdrawn from sale by the firm.
Initially known as 'property insurance', the product was rebranded as 'purchase protection insurance' from September 2008 onwards.
After examining the cover, the FCA found it "did not provide adequate value to customers because although it covered all items purchased, these were predominantly items of clothing, which customers would not generally consider insuring".
An Express Gifts spokesperson told MoneySavingExpert.com that the firm "take its regulatory responsibilities very seriously" and that it puts "its customers at the heart of everything" it does.
They added: "This programme [of redress] is the result of a thematic review that Express Gifts undertook into financial products sold in the past.
"After identifying this situation, the company notified the FCA and has worked with them to address the matter."
Get Our Free Money Tips Email!
I shop with Ace and/or Studio – am I affected?
Most affected customers will be proactively identified by Express Gifts and will automatically receive refunds plus interest on the premiums they paid, so they don't need to do anything.
Customers will receive a cheque in the post, though the sheer number of refunds owed means it could be up to a year before they are all sent out.
If you believe you were sold the insurance and have since changed your name or contact details, let Express Gifts know of your new address using this form so it can contact you about your refund.
If you're an Ace and/or Studio customer and you believe you've been sold this insurance, you can contact the firm on 01254 356839.
What does the FCA say?
Jonathan Davidson, FCA director of supervision for retail and authorisations, said: "It is good news for consumers that Express Gifts has reached agreement with us that this insurance was of low value to customers. It is important that firms offer value for money.
"We expect firms to identify where insurance products of little or no value have been sold to customers and take appropriate action. There is a responsibility on firms, whether they are responsible for the design or the distribution of these products, to ensure the products offer value for their customers."