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CPP shares suspended on stock exchange

• Move follows investigation by Financial Services Authority
• Credit card insurer told to review past business practices
• Firm warns that share suspension could last ‘some time’

Shares in CPP, the embattled credit card insurer, have been suspended on the London Stock Exchange following a Financial Services Authority investigation.

The financial regulator asked the company over the weekend “to undertake a review of certain past business sales and to make certain changes to its renewals process”, a move that follows findings made by the FSA during an investigation dating back to last March into the group’s sales practices.

In a statement CPP, which acknowledged that a review of its past business practices was “appropriate”, said: “It is likely that any agreed outcome will have a significant adverse financial impact on the group, but until such outcome is determined the group cannot predict the scale or consequences of that impact. Given the uncertainty as to such outcome, CPP is currently unable to assess accurately its financial position and inform the market accordingly, and as such considers an immediate suspension to be appropriate.”

CPP said it expected the shares to remain suspended until it worked out the financial impact of the FSA’s requirements and said this could take “some time”.

The suspension is the latest setback for CPP, which sells insurance packages to protect against a range of problems from identity theft to pest extermination in homes. Last week Barclaycard decided against renewing its contract with the company, having already suspended some sales of CPP products last year. The credit card supplier will now end its relationship with the insurer within three to six months, a blow which CPP admitted would have an “adverse impact” on revenues and profits from 2012.

Following the suspension of its shares on Monday morning, CPP reiterated the potentially dire implications to its business.

It said: “Whilst CPP has acknowledged to the FSA that a past business review is appropriate, the board of CPP has informed the FSA that its requirements are disproportionate and threaten the viability of the business. The board has been, and remains, absolutely committed to working closely and co-operatively with the FSA to resolve its issues. At the same time it has frequently emphasised the potential threat to CPP, a business which employs 1,341 people in the UK and 1,969 people in 16 countries worldwide, of prolonged discussions.”

CPP raised £150m in a flotation in 2010 which saw its shares listed at 235p and make founder Hamish Ogston £120m. The shares closed at 103p on Friday. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds