Founder may inject cash into troubled CPP Group

Hamish Ogston, who founded the York-based company more than 30 years ago, told the Yorkshire Post he has explored the possibility of injecting money into the company.

CPP’s lenders Royal Bank of Scotland, Santander and Barclays are reportedly reluctant to extend its loan facilities after a probe by the Financial Services Authority into mis-selling.

Its shares are suspended while the company also tries to win over its banking clients on which it depends for sales of credit card and mobile phone insurance.

Asked if he will inject his own money, Mr Ogston said: “We have not got to that stage yet.

“I have done a whole lot of due diligence in the last fortnight as a possibility and I’m waiting for another report next week. It depends on where the dice have fallen.”

CPP’s £80m revolving credit facility expires in March 2013.

Mr Ogston made about £120m from CPP’s flotation in March 2010, and still holds 57 per cent of its shares.

He founded the company as Card Protection Plan in 1980, opening headquarters in York in 2000. A major philanthropist, Mr Ogston gave £2m to York Minster in 2008. Last year he received a CBE at Buckingham Palace for services to business and the community of York.

“Entrepreneurs think of their companies as a child,” said Mr Ogston, a CPP non-executive director. “You spend more time with your company than with all of your children put together.

“I was very proud to have been awarded a CBE as a result of (growing CPP) together with all of the things I was doing for the North of England.”

But the entrepreneur said he will not buy the business back.

“I would not want to do that having only got it public two years ago,” he said. “There’s lots of benefits to being on the public markets in fundraising.

“The downside is if there’s an FSA investigation you have to announce it. That was certainly the problem a year ago.”

CPP announced the FSA probe in March 2011, and last month warned the FSA’s demands threatened its viability.

Days later the company announced it had reached a “positive” agreement with the regulator. This will mean a review of past sales, plus more notice for customers around the automatic renewal of its products.

CPP said implementing the review will cost £10m to £15m. On Monday it told staff it will cut 115 jobs, almost 10 per cent of its UK workforce. Asked if CPP remains a viable company, Mr Ogston said: “It’s a very good business going forward. It’s a very good service and our customer surveys point out that people are very satisfied with it.

“That’s shown in the renewal rates and the questionnaires that they fill in.”

He said he expects the business to retain an insurance element in future. “It’s a mixture as we are at the moment,” he said.

Mr Ogston declined to predict if the group’s other investors will stick with the company.

“It all depends on the statement we make when the shares are unsuspended,” he said.

But he added RBS, Santander and Barclays would gain from continuing to support CPP. “All three of them earn money out of us,” he said. “They are all our business partners as well as lenders.”

Staff recently wrote to the FSA to urge leniency. York MPs have also written to its banks to call for support.

CPP employs 1,341 in the UK, including about 1,000 in York, and Mr Ogston said it is vital the company remains a big Yorkshire employer.

“It is very important. There are not the opportunities (in the North) that there are in the South of England.

“We are one of the few international businesses so it’s not dependent on the UK economy. We are trading in China and Brazil.

“It (the North) matters a lot to me and I talk about high speed rail, linking airports and economic policy with Government ministers. I have been involved in making the people who are working on this think about more than London and the South East.”

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