ABOUT seven million people mis-sold cover for bank and credit cards are to receive payouts after a £1.3bn compensation deal was approved.

Credit card insurer CPP said customers had overwhelmingly backed the proposed compensation scheme, with 98 per cent voting in favour, which now paves the way for payouts to begin in the spring, subject to High Court approval.

CPP, based in York, and 13 high street banks and card companies, through which the insurance was sold, have agreed to a package that will see affected policyholders receive between £100 and £300 each.

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CPP was fined £10.5m in November 2012 after regulators found it gave misleading and unclear information about credit card and identity theft insurance.

The mis-selling scandal ran from 2005 to 2011, although only a proportion of the policies sold were arranged directly through CPP.

Many customers were sent new bank cards which they had to activate by going through a CPP call centre, where they were offered insurance.