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.

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.

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"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