The UK Financial Services Authority (FSA) has pounced on card protection giant CPP over suspicions that it might have exaggerated the risks of identity theft when selling consumers one of its products.
On a day that saw the recently listed company’s shares plunge by more than half before recovering slightly to 156p, the company suspended sales of all its ID protection products while the matter is investigated.
In a market statement, the company said it contested the FSA’s “concerns” which related specifically to the insurance element of its ID protection product. The company now plans to redesign its products to remove this cover.
“The FSA has raised issues over the description and way the insurance product works and whether we have overstated the risks of identity theft,” chief executive Eric Woolley was quoted as telling The Daily Mail.
Exactly why the FSA has decided to act now is still unclear, but the news a huge blow to a company that has devoted PR time to associate itself with the theme of identity theft and protection in the minds of consumers.
The insurance component of the ID theft package used to recompense customers for up to £60,000 of costs associated with clearing up the aftermath of ID theft problems. It is possible that some consumers mistook this for an insurance against actual losses, which is something entirely different. The sales team at CPP does push additional cover with a zeal.
The company sponsors regular surveys on the topic of UK card theft using its Card Fraud Index, and comments on ID theft more generally.