CPP has been slapped with a joint-record £10.5m fine for misselling card protection insurance, following an FSA probe that lasted more than a year and wiped 90 per cent off the firm’s market value.
The company has been left with a bill for £33.4m, including redress for customers and costs associated with the investigation, but said the settlement is “an important milestone” that allows it to focus on sorting out its debts and rebuilding its reputation.
As part of its settlement, CPP has pledged to stop borrowing money against its insurance or credit card arms. This puts more pressure on the firm to fix its finances by March, when its debts mature.
US firm Affinion has made a preliminary takeover approach for CPP, but declined to comment yesterday on whether the fine would affect its decision to bid.
The FSA said that from 2005 to 2011, CPP sold or renewed 23.1m insurance policies but was “overly persistent” with customers and overstated the benefits involved.
CPP’s partners, which include RBS, Santander and HSBC, are in talks about how best to compensate customers who were missold cover. Several banks “introduced” customers to CPP by adding stickers to new credit and debit cards.
An RBS spokesperson said the bank will likely end its contract to provide mobile phone cover with CPP, and pledged to “co-operate with anything [the FSA] asks of us”.
Peel Hunt said the loss of RBS was worrying “as it is the business partner Affinion would value most”.