CPPGroup plc - Agreement with the FSA
24 February 2012
Further to the announcement on 20th February, CPPGroup plc ("CPP" or the "Group") announces that it has reached agreement in principle with the FSA in relation to the scope of actions necessary to address certain failings in CPP's sales processes.
In relation to both its Card Protection and Identity Protection products, CPP has agreed with the FSA to undertake a past business review whereby CPP will contact customers whom CPP approached directly to purchase the products.
CPP has also agreed to implement with FSA oversight a number of changes to its renewals process, in order to highlight more clearly to customers that they have the right not to renew the product, and to explain clearly to the customer the advantages and limitations of the relevant product. CPP will now work with the FSA to agree the detail of these proposals.
Further, CPP has agreed to certain restrictions on the disposition of assets, including in relation to the payment of dividends. In particular, shareholders should be aware that the Group will not declare or pay any final dividend in respect of the financial year ended 31 December 2011.
CPP considers this agreement to be a positive development. The resolution of these issues allows CPP to renew its focus on evolving towards a more customer centric business.
In assessing the likely financial impact, CPP has with its advisors considered a number of assumptions, including as to customer response rates to the past business review and any impact on renewal take up rates. Based on those initial assumptions, CPP estimates that the financial exposure of the Group resulting from customer compensation, potential loss of renewal business and costs associated with carrying out the past business review, is expected be in the range of £10 million to £15 million.
CPP remains in discussions with various stakeholders, including its financing banks and business partners, as to the ultimate impact on the business of the FSA's investigation. Until those discussions have concluded it is expected that the suspension of CPP's shares remains in place.
Further announcements will be made in due course.
Paul Stobart, 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