CPP stock falls after FSA probe hurts earnings

SHARES in the troubled card insurer CPP resumed trading for the first time in over month yesterday, and promptly dropped 36 per cent as investors fled the firm, which has been troubled by regulatory investigations.

The decision to re-list was made following the announcement of full-year results that show the firm’s pre-tax profits dropped to £28.3m in 2011, down from £39.8m a year earlier.

CPP, whose products are aimed at victims of identity theft, has been under investigation by the Financial Services Authority (FSA) since March 2011 for allegations of mis-selling.

The FSA says the firm may have overstated the risks of identity theft to customers and not properly explained how its products worked.

Despite the probe revenues grew by six per cent to £346m with a renewal rate of over 75 per cent across the group.

In February CPP came to agreement with the FSA to make a number of changes to its renewals process and undertake a review of its past business, but the company said the matter was not yet fully resolved.

Chief executive Paul Stobart said: “2012 is a very important year for us, particularly in the UK, and my first priority is to work closely and co-operatively with the FSA to resolve matters to the complete satisfaction of the regulator.”

The company also said it was making good progress on improving its business practices and customer relations.

“We did not in the past live up to the standards required and we’re deeply sorry that was the case,” Stobart said.

Earlier this month the firm announced plans to sack a tenth of its UK workforce. The firm currently employs over 1,300 people at sites in York, Chesterfield and Tamworth.

Share closed yesterday at 67p, down from 103p when shares were halted in February and a high of 319p in January 2011.