CPP hits milestone and looks to better future

MANY consumers have had, or know someone who has had, letters from CPP in the last few weeks.
Chief Executive of CPP, Brent EscottChief Executive of CPP, Brent Escott
Chief Executive of CPP, Brent Escott

The York-based card protection firm has been writing to its seven million customers after setting up a compensation scheme following its mis-selling of insurance for bank and credit cards between 2005 and 2011. Customers voted in favour of the scheme earlier this month and payouts from CPP’s £65.8m pot of cash are expected to go ahead later in the spring.

It is a welcome milestone for chief executive Brent Escott.

“The scheme is really important and we’re really pleased it is moving in the right direction,” he says.

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Customers paid £30 a year to insure their bank or credit cards and £80 for identity protection through CPP and its partners – 13 high street banks and card companies. But in many cases they did not need such policies, because they were already protected by their bank or card issuer

In some cases, customers had to activate new bank cards by going through a CPP call centre, where they were offered insurance.

As a result, CPP was fined £10.5m in November 2012 by the then Financial Services Authority.

In the months that followed, the company’s share price fell dramatically and it lost a number of large contracts including RBS and Santander. By April 2013, CPP Group had plunged to a £20m annual loss. Sales from continuing operations fell 10 per cent to £270m as fewer customers signed up or renewed policies.

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Founder Hamish Ogston tried to buy the company but walked away in June after withdrawing his £1.7m bid. Shortly afterwards, chief executive Paul Stobart and chief financial officer Shaun Parker left the business.

Last month, chairman Charles Gregson announced his intention to step down. Mr Escott joined the company as deputy chief executive last June and replaced Mr Stobart in September tasked with concluding the compensation scheme and re-building the business. In August, CPP was handed a £36m lifeline by its banks and things were beginning to look up for the firm.

The company has had to dramatically slim down its operations, including reducing its workforce from 1,600 to 1,100, to secure its future.

Mr Escott said: “The organisation today is completely different to what it was. I think it’s healthy. You want fresh eyes, fresh ideas, fresh people.”

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Re-building the business isn’t going to be easy but Mr Escott is up for the challenge.

“The interesting thing about CPP is that it was extraordinarily successful, it grew very fast, but it didn’t spend enough time building strong foundations.

“The mis-selling was something that occurred some time ago and of course it’s damaging. It’s evident in the collapse of the share price and the fact that we’ve had to significantly reduce the size of the business.”

He adds: “The silver lining to the events that have occurred is that the organisation we can re-build should be stronger than if CPP had just continued as it was.”

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Moving forward, Mr Escott plans to enter the digital arena.

“We see ourselves being a much stronger element within the digital space, whether it’s apps on a phone or using the internet,” he says. “We want to respond to the way people live today. It’s early days. We’re in the experimental phase of development.”

Many customers are understandably furious at the mis-selling debacle but CPP still retains a 70 per cent customer retention rate.

“Yes, there was clearly mis-selling but actually we have an awful lot of customers who are very happy with the product,” said Mr Escott. Is he confident that a mis-selling scandal could never happen again at CPP? “Yes,” he says. “Because things are completely different now to when it happened. Regulation was introduced in 2005 when the whole industry had to review and change how it handled customers.”

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