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What is a scheme of arrangement?


A scheme is an arrangement between a company and its creditors (in this case, potentially, our customers). It is governed by Section 895 of the Companies Act 2006.


How is the scheme approved?


In order for the scheme to be approved, a number of steps have to take place:

  1. it must be approved by a majority in number and 75% in value of scheme creditors that vote. Where there is more than one class of scheme creditor, each class must approve this in separate meetings;
  2. it must be approved by the High Court of England and Wales; and
  3. a copy of the High Court’s approval must be registered at the Registrar of Companies.

The scheme has now been approved by creditors (policyholders) and sanctioned by the High Court, and became effective on 31 January 2014.


Key features of a scheme


The details of the scheme are set out in the explanatory statement we sent customers with our letter in November 2013 inviting them to vote. A copy can be downloaded here. The key features are:

  • Customers will not have to make a complaint to have their policy reviewed. Customers also will not have to use and pay a company to complain or claim compensation on their behalf.
  • The scheme will pay compensation, where it is due, as quickly as possible.
  • The claim process is straightforward and the claim form is simple to complete if customers wish to claim compensation and cancel their policy.
  • If customers are entitled to compensation we will pay them the amount they have paid for their policy since 14 January 2005, less any amounts they have received in respect of the policy, plus interest on the amount owed.
  • The scheme is funded by us and the main banks and card issuers that sold the policies. This means we are able to pay compensation to more people, if they are entitled to it, than if it was only us funding the scheme.