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CPP fined by FSA for insurance mis-selling

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by Jan Harris
CPP fined by FSA for insurance mis-selling

Card insurer CPP faces the joint-largest mis-selling fine ever imposed by watchdog the Financial Services Authority after it was found to have mis-sold insurance products.

As well as the £10.5m fine, the group expects to pay out £14.5m in compensation to both private individuals and businesses who were mis-sold products.

The FSA found that CPP’s sales staff were encouraged to be “overly persistent” with customers, even after the customer had turned down a product.

Staff were given targets to talk customers out of cancelling their policy.

CPP sold a card protection product which offered £100,000 of insurance cover if a customer incurred losses after a card was lost or stolen.

The product, which cost £35 a year, was unnecessary as cardholders are generally covered by their banks and are not liable for unauthorised payments on lost or stolen cards.

The company also sold identity theft insurance for £84 a year and was found to have overstated the risks and consequences of identity theft to customers when selling the product.

CPP, which is based in York, has apologised for the mis-selling, which occurred between January 2005 and March 2011, and is currently reviewing its practices.

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

Earlier this month CPP revealed it had received a takeover approach from US rival Affinion Group.

The approach is at an early stage and may or may not lead to an offer being made for CPP.

The Affinion Group provides lifestyle services and personal protection, points program management, and insurance.

It has offices in the UK, Europe and South Africa, as well as throughout the United States.

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News posted: November 15, 2012

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