CREDIT card insurer CPP Group said its international business is making good progress with new contract wins in Turkey, Spain and Italy, but its UK arm is being held back by an ongoing investigation by the City watchdog.
The Financial Services Authority has raised “serious concerns” about how the York company sold its identity and card protection policies.
CPP has agreed to make changes to its renewals process and review past business, but is still under investigation by the FSA.
Yesterday CPP’s finance director Shaun Parker said the investigation is ongoing, but the outcome and duration are still uncertain.
CPP said its operating performance continues to be in line with current market expectations whilst it navigates the “short-term challenges in the UK”.
The group expects a modest decline in half year revenues for the six months to June 30.
Mr Parker said this decline is in line with previous guidance of a four per cent reduction.
“The UK is severely impacted,” said Mr Parker. “We’re not selling any new card protection policies and we also made the decision to stop selling identity protection policies.”
The group is working on new propositions for the future with plans to revamp both card protection and identity protection products.
CPP said the UK decline has been partially offset by an increase in mobile phone insurance.
Mr Parker said the switch to smartphones and higher value phones has made mobile phone insurance more viable.
CPP is in the middle of a tender process with Everything Everywhere. It already has a relationship with the company’s T-Mobile side of the business but it is now pitching for the Orange business.
The group reported a decline in Southern Europe where challenging economic conditions are having an impact on the business. Revenue growth in North America and Asia Pacific was reported to be strong.
CPP has agreed to conduct a past business review under FSA supervision of direct sales of its card protection and identity protection products made since 2005 and to offer redress to customers where appropriate.
It reiterated that it is possible that other claims or matters may arise against the group in connection with the FSA’s investigations.
These could take a number of forms and have a financial impact that isn’t known yet.
As a result the group is sticking with the £15m contingent liability identified at the time of the 2011 results.
CPP said a further update will be provided in the half year results announcement.
Earlier this year, the FSA said CPP may have overstated the risks of identity theft to customers and not properly explained how its products worked.
CPP agreed in February with the FSA to make a number of changes to its renewals process and review its past business.
The group subsequently warned that the FSA’s demands threatened the viability of the business, which employs around 1,000 people in York.