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.