CREDIT card insurer CPP suffered a fresh blow yesterday after it revealed Barclaycard has decided to stop using its services, which are currently under scrutiny from the Financial Services Authority (FSA).
Shares in the firm plummeted 14 per cent to 129p after Barclaycard put on hold the use of its “call to confirm” service, used to check receipt of a new credit card and as a sales tool for insurance products.
CPP’s shares, which listed at 235p last year, have plunged after it revealed the FSA investigation last month.
The loss of Barclaycard, which has more than 11m customers in the UK, has been viewed as a huge blow.
Peel Hunt analyst Henry Carver said: “You would have to ask yourself if anyone else would be considering what they do with CPP.
“The product is still trusted and used by people and business partners, but the prospect of the FSA getting involved is a massive blow for sentiment.”
CPP attempted to play down the impact, saying sales to Barclaycard customers accounted for just two per cent of its revenues.
The fortunes of several firms have been dashed by the mention of an FSA investigation, even before the conclusion of a probe.
Last year, British fund manager Gartmore was rocked by an investigation into its hedge fund star Guillaume Rambourg, which led to the ultimate demise and takeover of the firm.
24 March 2010
CPP lists on the London Stock Exchange through an initial public offering (IPO). It had priced the float at 235p per share, giving it a market capitalisation of about £396m. The share price rises to 290p per share, and is viewed as a successful listing.
3 March 2011
The firm announces bumper results for its first year as a listed company. Underlying profit before tax increased 33 per cent to £46.7m on earnings of £325.8m. It predicts further growth for the year ahead.
28 March 2011
CPP reveals it is in “discussions” with the FSA over the sale of its card protection and identity protection products. The group contests the concerns raised by the watchdog. The FTSE 250-listed company’s share price halves following the announcement.
11 April 2011
CPP says Barclaycard has stopped using its services pending the outcome of the Financial Services Authority investigation into its sales practices.