CPP admits to errors in its dealings with 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.

Speaking after the company’s annual general meeting, Hamish Ogston told the Yorkshire Post: “We weren’t really involved in the right way with the supervisory arm of the FSA.

“I seem to remember that in 2008, they said that they weren’t going to do another Arrow visit for two years. You can take what you want from that but I think we took that everything was fine and they were going to leave us alone.”

These visits form part of the FSA’s approach to assessing and dealing with risk.

The FSA was involved in due diligence in the lead-up to the CPP’s successful flotation in March 2010, but decided to launch its investigation a year later.

“Having come back in 2011 it was with a vengeance and it has totally swamped our management with information requests, recurring issues that has taken up until next month to do a past business review,” said Mr Ogston.

The company had earlier warned that the FSA’s demands threatened the viability of the business, which employs around 1,000 people in York.

CPP suspended its listing in February and shares slumped by more than a third on relisting after the company warned that the FSA probe continued despite the agreement.

Revenues have fallen by 4 per cent since January.

Mr Ogston said: “They are down for the first time in 30 years. [The FSA investigation] has affected our ability to tie down contracts with existing business partners and new business partners.”

Last year, group turnover rose six per cent to £346.1m , but operating profits fell 34 per cent to £29.7m, resulting from £16.9m costs associated with the probe.

CPP operates a business-to-business-to-consumer model across 16 geographical markets.

Mr Ogston said regulators in other countries are catching up with the FSA’s increasingly intrusive approach.

He added: “The new American model will probably be aping what’s going on. In the second world countries we are in, India, Brazil and so on, the regulators are starting to behave more like the ones in the first world.”

He expects telephone and branch sales to become more difficult and predicts that the written word will make a comeback as regulators crack down on selling practices.

Mr Ogston made about £120m from CPP’s flotation and still holds around 57 per cent of the shares. He is thought to be worth £253m, down from £317m in 2011.

Mr Ogston said that investing more of his money in CPP “is an option”, but he is hopeful that the group’s three lenders will continue to provide support. He added that the banks are also the company’s business partners and benefit from substantial renewal commissions.

Mr Ogston is one of Yorkshire’s biggest philanthropists and gave £2m to York Minster in 2008. Last year, he received a CBE for services to business and the community of York.

Asked how the events of the last 12 months have affected him, Mr Ogston said: “I’m not happy that millions of pounds that I pledged to charities and good works I’ve had to delay or suspend. It makes me look a bit of a chump.

“There’s a huge loss of value in my shares over the last year and a half and I’m no longer in the position I thought I was in terms of being able to help others.

“I’m just hoping we can get this sorted and put it behind us and have business meetings talking about positive things and growth of the business again.”

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