CPP expects tough 2013

The probe by the Financial Services Authority (FSA) into the way in which CPP sold protection against identity theft, launched in March last year, has already rocked the York-based company and battered its share price.

CPP, which reported a decline in underlying operating profit and a six per cent drop in group revenue for the period since June 30, said it has made a £24.9m provision for customer redress and associated costs of the FSA probe.

Renewal rates have fallen by 0.6 per cent since June 30, with live policies are down by 500,000.

The group said that while it is still uncertain about the duration and outcome of the probe, it has agreed with the FSA a framework for the operation of its regulated UK operations.

Under the framework, restrictions on new retail sales of its regulated card protection and identity protection products will continue and will be extended to other business areas including mobile phone insurance.

Restrictions on asset dispositions will be extended to cover both Card Protection Plan Ltd (CPPL) and Homecare Insurance Ltd.

CPP said it had also agreed with the FSA that CPPL would not participate in future group borrowing arrangements or offer its assets as security related to the group’s borrowings.

The group said it expects this to come into effect in 2013.

The company said these measures would not affect the security of its revolving credit facility, which is due to expire in March 2013, but that the measures could impact its ability to raise debt finance.

It is assessing a range of financing options with its lenders.