Money alert: Credit card insurance

High street banks are being forced to pay compensation of £1.3bn after they were found guilty of flogging useless and unnecessary credit card fraud and identity theft insurance.

It means 7m people are now in line for payouts averaging almost £200. Those affected were sold the policies between January 2005 and March 2011 by 13 banks, including Barclays, HSBC, Nationwide, Santander, Royal Bank of Scotland, Bank of Scotland, Tesco Personal Finance and credit card provider MBNA.

Other firms involved were Capital One, Clydesdale Bank, the Home Retail Group, Morgan Stanley and Egg Bank, now known as Canada Square Operations.

But people mis-sold the policies will have a lengthy wait for their cash – payments are not expected to be made until spring 2014, after the compensation scheme is approved by the High Court.