RNS Number : 7736D
28 March 2011
Discussions with FSA
CPPGroup Plc ("CPP" or "the Group") announces that it is in discussions with the FSA in relation to certain issues surrounding the sale of the Group's Card Protection and Identity Protection products. The FSA's investigation only relates to such of the Group's products as are sold into the UK, and specifically to alleged failings in sales calls with customers. The Group may need to conduct a review in order to identify whether any deficiency has caused customer detriment requiring redress.
In relation specifically to CPP's Identity Protection products in the UK and notwithstanding the fact that the Group contests a number of the concerns raised by the FSA, the Group has decided to suspend all new sales of Identity Protection with immediate effect in CPP's own voice channels. The Group's Identity Protection products comprise a package of life assistance customer benefits including caseworker support to re-instate identity, online access to credit reports including email or SMS alerts and a parameterised internet search facility with associated email alerts. The pure insurance component of such products, which is the component that makes the product subject to FSA supervision, is comparatively small. As such, CPP intends to develop and design a non-insurance Identity Protection product, which it believes will remain an attractive offering for its customers. Sales of the redesigned product are expected to commence in around six weeks time.
The new Identity Protection product will be a service product, and as such revenues will be deferred over the one year term of the product. This contrasts with the revenue recognition of the existing insurance product where a large proportion of the price is accounted for as an introductory fee related to making insurance arrangements and is therefore recognised when the product is sold. This change, which has no material impact on the cash or value received by the Group, does result in lower revenue and profit recognition in the year for the same level of sales. The financial impact of both the suspension of sales of the insured Identity Protection product in the UK and the deferral of income is likely to reduce the earnings for the current financial year. The Group expects to be able to mitigate to some extent the financial impact through sales of alternate products, including Card Protection. The net impact however is that underlying operating profit is expected to be below the lower end of the current range of analysts' estimates for 2011.
The Group continues to work with the FSA in relation to this matter. At this stage the Group cannot provide any further information on the likely outcome of those discussions, or the potential consequences on the operations and/or financial position of the Group. Further announcements will follow once the Group has further clarity on the FSA's findings and conclusions.
CPP is committed to running its business with the highest levels of integrity and treating its customers fairly. We have confidence in our processes and our agents are measured against demanding standards of regulatory compliance, all undergoing rigorous FSA compliant training before they take a live call.
A conference call for analysts and investors will take place at 8.00am GMT on 29th March, 2011. Please contact Rebecca Hougham at Tulchan on 0207 353 4200 for details or e mail firstname.lastname@example.org.
Eric Woolley, Group Chief Executive
Shaun Parker, Chief Financial Officer
Tel. +44 (0)20 7353 4200 (today)
Tel: +44 (0)1904 544702 (thereafter)
Tel. +44 (0)20 7353 4200
Notes to editors:
CPP is a leading international Life Assistance business with operations in 15 countries in both developed and developing markets. CPP's products and services are designed to meet consumer needs across a range of requirements, in particular relating to credit and debit card ownership, personal identity, mobile telephones, travel and the home. The Group primarily focuses on providing customer assistance during stressful life events such as losing or having a wallet, purse, mobile telephone or keys stolen, as well as support in the event of identity theft.
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