CPP says FSA mis-selling probe could cost £15m

Have your say

CREDIT card insurer CPP Group has struck a deal with the City watchdog on a mis-selling review, which will cost it up to £15m.

The York-based group, which earlier this week warned the probe by the Financial Services Authority risks its viability, today said the agreement is a “positive” one, allowing it to move on.

CPP previously described the FSA’s demands as “disproportionate” and “shocking”, suggesting it has agreed a new set of watered-down sanctions. It did not previously disclose the watchdog’s specific demands.

The group said it will contact customers it approached directly to buy its products. It has also agreed to “highlight more clearly” to customers that they have the right not to renew its products. Analysts had feared it could be forced to end automatic renewal of its products.

CPP also agreed not to pay a dividend for the year to the end of 2011.

“CPP considers this agreement to be a positive development,” it said. “The resolution of these issues allows CPP to renew its focus on evolving towards a more customer centric business.”

The group said the combined cost of payouts and the business review, plus customers choosing not to renew, is likely to range from £10m to £15m.

However, CPP, whose shares remain suspended, said it remains in talks with banks and business partners. It sells products such as credit card, wallet, identity and mobile phone protection to customers of banks and building societies.

Barclaycard, one of its top five customers, recently decided not to renew its contract.

CPP, founded more than 30 years ago, has a 1,969-strong workforce - which includes about 1,000 in York.