CPP 2012 profit to fall as FSA probe hits sales

CREDIT card insurer CPP Group warned that its 2012 profit was likely to be significantly lower than this year as sales are hampered by a regulatory probe which started in March but still has no finish date.
By The Newsroom
Published 12th Dec 2011, 08:50 BST

Britain’s Financial Services Authority (FSA) is investigating the way in which CPP sold protection against identity theft, a probe which led Barclaycard to suspend sales of some CPP products.

Today, York-based CPP said the duration and outcome of the FSA’s probe was uncertain but that trading had remained robust with the firm expecting organic revenue growth of around six per cent for 2011, broadly in line with market expectations.

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Underlying group operating profit in 2012, however, is likely to be significantly lower than 2011 due to the impact of lower sales this year, and increased regulatory costs and economic pressures in southern Europe

“The transition to a new Identity Protection product has meant lost sales opportunities and this, combined with challenging trading conditions in Southern Europe, will impact the business in the near term,” the company said in a statement.

Paul Stobart, group chief executive, said: “It has been a challenging year for CPP as the business has adjusted to the implications of the FSA’s ongoing investigation announced back in March. The transition to a new Identity Protection product has meant lost sales opportunities and this, combined with challenging trading conditions in Southern Europe, will impact the business in the near term.

“Our UK business has been and will continue to be impacted by the uncertainties created by the FSA investigation and will take time to regain momentum. However, we are making excellent progress in many of our international operations, including our newer markets, such as China and India, which offer significant longer term potential.

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“We continue to work constructively with the FSA as we seek a resolution to its investigation, and we are pleased with progress on improving our internal processes and customer facing activities. We remain focused on providing an excellent, market leading service to our customers.”

Shares in the firm closed on Friday at 139 pence, down almost 50 per cent on a year ago, valuing the business at around £240m.

Related topics:CPP GroupBritainYork