CPP hit by termination of Barclaycard contract
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Your support makes all the difference.Shares in the credit protection firm CPP sank a further 14 per cent to 129p today after its contract to manage Barclaycard’s credit card activation line was cancelled.
The company’s shares stood at 280p on 28 March before news of a Financial Services Authority investigation into “failings in sales calls” at the York-based FTSE 250 company saw its value halved. Yesterday’s share slump was on fears that the latest move could lead to more of CPP’s 200 business partners cancelling contracts.
But the chief executive, Eric Woolley, who brought the 30-year-old company to the stock market last summer, denied that Barclaycard’s move had anything to do with the FSA investigation. “The announcement needs to be put into context,” he said. “Barclaycard wishes to review its ‘call to confirm’ channel. It’s not directly related to our announcement two weeks ago.”
Barclays confirmed the review. A spokesperson said: “We regularly review our processes including the way we issue replacement cards to our cardholders. We’re investigating new ways of establishing safe receipt, where that’s appropriate, while giving our customers the opportunity to learn more about our products and some of their newer capabilities.”
The business accounts for about 2 per cent of CPP’s revenue and will hit its profits from renewals from 2012 onwards, the company said.
But Barclaycard is continuing to sell the company’s card protection and identity theft protection products through other channels, CPP added. “We will continue to work with the banks and others to manage fraud risk,” Mr Woolley said.
The company is continuing to contest FSA claims that its identity theft insurance was mis-sold or that its sales-force exaggerated the risk of identity theft to sell the product. “We don't believe we’ve deceived people and our terms and conditions and sales scripts are clear,” said chief financial officer Shaun Parker.
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