CPP tanks after losing Barclaycard contract
Shares in identity theft and credit card insurer CPP hit a 52-week low of 105p on Wednesday after Barclaycard said that it will not renew its contract which is set to expire on March 31st.
Shares in identity theft and credit card insurer CPP hit a 52-week low of 105p on Wednesday after Barclaycard said that it will not renew its contract which is set to expire on March 31st.
Back in March, Barclaycard stopped sales using CPP's 'call-to-confirm' services after it was announced that the Financial Services Association (FSA) had raised sales-related issues with its certain products. The move saw CPP's shares tank from the now-current 52-week high of 310.8p to the 150p mark.
The loss of this contract means that new sales of the group's Card Protection and Identity Protection policies to Barclaycard's customers will cease. These policies equate to less than 1% of group revenue and there will be no material change in underlying operating profit this or next year.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"Whilst disappointed at Barclaycard's decision, the board remains positive about the group's prospects in the UK as the new business pipeline continues to build, the consumer appeal of the group's products remains strong, and relationships with business partners remain good," CPP said.
According to Peel Hunt analyst Henry Carver, "Barclaycard's decision not to renew its contract with CPP confirms our concerns over the risk of the loss of business partners in wake of the FSA investigation, the duration and outcome of which remain uncertain."
"The risk of further business partners ceasing their relationship with CPP remains very high, overshadowing forecasts," he said.
By 15:00, shares were trading at 105p, down 11.58% on yesterday's close of 118.75p.
BC/NR
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?
Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
By Kalpana Fitzpatrick Published
-
What does Rachel Reeves’s plan for growth mean for UK investors?
Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
By Katie Williams Published