CPP breaches covenants over compensation claims
CARD protection business CPP says it has agreed a deal with its lenders after breaching its covenants over compensation claims for mis-selling.
The group is now continuing to restructure its balance sheet following the £70m cost of its compensation scheme for mis-selling.
The York-based insurer which offers ID and credit card protection, was fined £10.5m in 2012 and ordered to pay out £66m in compensation to customers.
The deadline for customers to apply for compensation closed on August 30 and CPP said that the value of claims for direct sales was £32m while the total cost for customer redress and associated costs is £69.8m.
Its loan facilities contain covenants where customer redress response rates leading to a successful claim under the compensation scheme exceed 40% and these have hit 41.5%.
CPP today confirmed that a waiver has been agreed with the group’s lenders over the covenants.
It said it is looking at options to restructure its balance sheet and strengthen its capital position.
Brent Escott, group chief executive, said: “The end of the Scheme represents a significant milestone for the business. Its impact, nonetheless, has been considerable and consequently, the group’s financial resources and liquidity is significantly reduced. Work is progressing to restructure the group’s balance sheet and to provide a stronger platform from which the business can look forward.”
