CPP Group fears collapse
CPP Group Plc, which provides credit card and identity protection, claims that a mis-selling investigation by the Financial Services of Authority (FSA) could put it out of business.
The FSA has been reviewing the firm for a year following complaints over the way it sold card protection and identity protection products.
The regulator has now ordered the suspension of CPP’s shares and has called for a far-reaching investigation into past sales in order to assess how much mis-selling occurred.
It is claimed that CPP over-stated the potential risks of identity theft when selling products and it could be forced to pay redress to customers who were the victims of mis-selling.
Paul Stobart, CPP’s Chief Executive Office, claims that the scale of the review puts the jobs of its workforce at risk.
CPP stopped selling identity protection products to new customers in March 2011 and has re-written its sales scripts for card protection products.
Mr Stobart said: “The business review which the FSA is calling for is disproportionate.
“So much so that it threatens the viability of the whole business.
“That means not just our shareholders but also more than 1,300 who work for us in the UK.”
CPP does not deny that mis-selling occurred and says it will compensate customers, but the scale of the review demanded by the FSA would involve huge costs and cause difficulty for the company’s business partners.
Meanwhile a Global Insurance Consumer Survey by Ernst & Young has found that UK consumers are twice as likely to switch insurance provider as consumers in mainland Europe.
According to the survey, consumers find life insurance products too complicated and would move to providers who communicate better and offer more transparent products.
However it also found a high level of trust in insurance companies by UK consumers with a third of consumers willing to pay more for products from a brand perceived as trustworthy and stable.
It seems that once again the FSA have shown that they are completely out of touch. Following their massive misjudgment of the banking crisis, and the governments attempts to shut them down they have been desperate to justify their own existence.
From 2010/11 to 2011/12 their funding requirement increased by 10.1%
They have now crossed the half £Billion mark with their most recent funding requirement announced on 2012/13 has increased by a further 15.6% to £578.4 million per year! Bizarrely, according to the FSA’s own website they believe that a 25.7% increase in funding over 2 years is “broadly in line with inflation”. (see press release 2nd Feb 2012 on FSA website).
With the government making cuts from essential public services such as teaching, policing, the NHS etc its clear that the FSA (who propose their own funding requirements) fail to understand the economic situation within the UK. The fact that they are prepared to put a FTSE 250 company out of business costing roughly 1500 jobs during the worst economic crisis of the past 50 years further emphasises this point.
I have a policy with CPP and they are actually very good. When I call them they are polite and helpful. I’ve never needed to claim on my policy because I’ve never lost my cards, but I’m happy to pay the small annual premium for my policy (which works out at less than £10 per year for each member of my family) to know that our cards, keys, wallets, handbags, passports, driving licences (and more) are covered. I don’t want any compensation for my policy, which I have had for over 15 years because I think it represents good value, but in today’s litigation culture my concern is that other people may see it as an opportunity to claim some easy money and a genuinely good British company (a rarity these days) will disappear down the pan.
According to the CPP website they received less than 8 complaints per 10,000 customers about terms & conditions and disputes over charges, general admin and customer service and other related topics between January and June 2011.
A year ago CPP was a thriving company worth over £500 million, – within the next week the FSA propose to put this company, which provides me with a product that I value, completely out of business and they should hang their heads in shame. Who do they think they are representing here?