Insurance firm lands record fine

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MAJOR York employer CPP Group has been handed a record £10.5m fine by the City watchdog for mis-selling credit card and identity theft insurance.

The Financial Services Authority said CPP “failed to treat its customers fairly” between 2005 and March 2011, and warned its fine would have been £15m if CPP had not settled early.

The watchdog found CPP sold customers insurance for credit cards which was not needed because they were already covered by their banks. It also overstated the risks and consequences of identity theft.

Staff were found to be “overly persistent” in trying to win over unwilling potential customers.

CPP also took payment from customers without permission, the watchdog said, adding it repeatedly warned CPP about its sales between 2005 and 2008.

Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “This is a serious case, one that has warranted our joint largest retail conduct fine and generated a sizeable bill for consumer redress.”

CPP, founded in 1980, employs about 990 staff in the UK and around 1,570 in total. It has so far set aside £14.5m to compensate customers and said the probe will cost it a total £33.4m. It warned of further cost cutting.

The FSA has also temporarily restricted its sales, asset movements and borrowing arrangements.

“We are deeply sorry for the errors and wrongdoings of the past and are paying a heavy penalty through what is a large fine,” said CPP chief executive Paul Stobart.

“The investigation is however now closed and we must look to the future. Many things have changed and are changing at CPP.”

See page 16 for more.