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CPP to join banks in paying £1.3 billion compensation bill
TROUBLED York credit card protection firm CPP is to join 13 high street banks in paying £1.3 billion compensation over its infamous mis-selling scandal.
The Holgate based firm, which now employs 600 people in the city, was fined a record £10.5 million in November last year by the Financial Conduct Authority (FCA) for mis-selling insurance products to millions of people.
Today the new regulator revealed a redress scheme in which banks and financial institutions along with CPP will pay compensation to as many as seven million people in the UK who were sold policies between 2005 and 2011.
The FCA said: “Customers were given misleading and unclear information about the policies so that they bought cover that either was not needed, or to cover risks that had been greatly exaggerated.
“As well as CPP selling directly to customers, high street banks and credit card issuers introduced millions of customers to CPP.”
Bosses at CPP said a £36 million refinancing of the firm, secured on July 31, coupled with a cost reduction programme and the sale of its North American business, will provide the money needed to pay redress.
The cost reduction programme has seen around 100 redundancies in York this year, with CPP CEO Paul Stobart and CFO Shaun Parker also due to step down.
In a statement Mr Stobart said: “We are in the early stages of rebuilding the group and although challenges and uncertainties remain, particularly in relation to the upcoming business review programme, we are focused on moving the business forward with a view to realising the potential opportunities that will deliver our future growth.”
This morning also saw CPP release its half year results which revealed a £3.5 million loss in the six months to June 30 compared with a £14 million profit for the same period last year.
Following a collapsed buy out deal in June, when the firm’s founder Hamish Ogston offered £1.7 million to buy the company, the business has revealed renewal rates have dropped to 71.3 per cent from 73.5 per cent at the year end and its live policy base has reduced from 10.1 million to 7.9 million.
The banks and credit card issuers joining CPP in the redress scheme are Bank of Scotland, Barclays, Canada Square Operations, Capital One (Europe), Clydesdale Bank, Home Retail Group Insurance Services, HSBC, MBNA, Morgan Stanley, Nationwide Building Society, Santander UK, The Royal Bank of Scotland and Tesco Personal Finance.
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