Blow as CPP loses contract with RBS

TROUBLED insurer CPP Group has been dealt a blow by Royal Bank of Scotland, which is not renewing its contract to provide UK mobile phone insurance.

The contract loss, while anticipated, piles more pressure on the York-based group ahead of a March 31 deadline on renewing its £80m revolving credit facility with Barclays, RBS and Santander.

CPP said RBS’s decision not to extend its contract for mobile phone insurance from March will have a “substantial adverse impact” this year and beyond.

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CPP, founded more than 30 years ago, was handed a joint record £10.5m fine by the Financial Services Authority last year for mis-selling.

The watchdog ruled CPP “failed to treat its customers fairly” between 2005 and March 2011, and warned its fine would have been £15m if CPP had not settled early. CPP has estimated the cost of the scandal and recompensing customers could be at least £33.4m.

CPP’s catalogue of problems have already forced job cuts and a deep overhaul of its business.

Yesterday, the company said it continues to adjust its business and cut costs “to mitigate some of the adverse profit impact of lower revenue”.

But it added higher FSA-associated costs and the lost RBS business will hurt its profits.

The company has said it is looking at “alternative financing”, which could include other forms of debt and non-core disposals.

CPP also lost a deal with Barclaycard a year ago.