YORK-based CPP Group today said it had experienced a “challenging” start to the year, as it counts the cost of a Financial Services Authority (FSA) investigation.
Earlier this year, the FSA said CPP may have overstated the risks of identity theft to customers and not properly explained how its products worked.
CPP agreed in February with the FSA to make a number of changes to its renewals process and review its past business.
CPP employs 1,969 globally, including about 1,000 in York. It sells protection for credit cards, wallets and mobile phones to customers of banks and building societies
CPP has today published an interim management statement for the period from January 1 2012.
During this period, while the FSA investigation continues, CPP said it had made “further progress” on the key management priorities announced at the group’s preliminary results in March.
The management statement added: “These include shifting the operating model to one of growth through customer focus, supported by strengthened management discipline and enhanced governance, and ensuring that the agreement we have reached with the FSA is effected to the satisfaction of all stakeholders.
“Despite the challenges presented by the ongoing FSA investigation, the group’s operating performance continues to be in line with current market expectations.
“Group revenue declined by four per cent for the period, which continues the trend indicated in our preliminary results announcement and is compared against the period in 2011 prior to the announcement on March 28 2011 of the FSA investigation and subsequent suspension of identity protection sales in the UK. This is the final statement where year on year comparative information will pre-date the impacts of the FSA investigation.”
In February, the group reached an agreement with the FSA “in relation to the scope of actions necessary to address certain failings in CPP’s sales processes and product design in the UK”, the statement said.
It was agreed that CPP would make changes to its renewal process and conduct a past business review under FSA supervision of direct sales of its card protection and identity protection products made since 2005, and to offer redress to customers where appropriate.
The statement added: “Prior to launch and to test operational processes, a pilot customer contact exercise will be undertaken. This is expected to commence shortly with the wider PBR to begin following its completion. As noted in the preliminary results announcement in March, the agreement with the FSA does not mark the end of the investigation for which the timing and outcome remain uncertain.”
Paul Stobart, the company’s chief executive, said: “It has been a challenging start to the year against a comparative period in 2011 which was largely unaffected by the FSA investigation in the UK, announced on March 28 2011.
“The short-term outlook for the business will continue to be determined by the ongoing situation with the FSA, and I have made it my first priority to ensure that the agreement we have reached with the regulator is carried out effectively. The longer-term opportunities for CPP remain considerable, and importantly it is very clear that customers truly value our products.
“I have confidence that we are providing effective propositions to customers and that our ongoing product innovation, underpinned by a culture of customer service excellence, will build our presence and relevance for business partners and customers alike.”