Insurance company CPP, which offers policies designed to protect against lost and stolen credit cards and identity theft, last night said that it is cooperating with an investigation by the Financial Services
Authority (FSA) into the sale of its products.
The FSA probe – into allegations that the risks of identity theft may have been exaggerated in
the sale of products – has led the company to suspend all sales of its current Identity Protection
products. The announcement had a severe impact on CPP’s share price, and has led the firm to issue
a profits warning.
Around a million customers have taken out a CPP policy that offers insurance against expenses in
dealing with identity theft, and which alerts policyholders when changes are made to their credit
ratings.
The company’s chief executive, Eric Woolley, said: “FSA has raised issues over the description and
way the insurance product works and whether we have overstated the risks of identity theft.”
CPP said in a public statement: “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.”
The company also indicated that the insurance element – which is the aspect of the product subject
to supervision by the FSA – only forms a part of their product and that they intend to “develop
and design a non-insurance Identity Protection product, which it believes will remain an attractive
offering for its customers.” Sales of the new product are expected to commence within around six
weeks.
