The company has also agreed to pay compensation to customers of around £14.5m, the chief financial regulator said in a statement.
Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “This is a serious case, one that has warranted our joint largest retail conduct fine and generated a sizeable bill for consumer redress.”
The FSA found widespread mis-selling of CPP’s two chief UK products between January 2005 and March 2011, reports The Telegraph.
It said the company “failed to treat its customers fairly and did not provide clear information to its customers”.
“CPP sold its Card Protection product by emphasising that customers would benefit from up to £100,000 worth of insurance cover, when this was not needed because customers were already covered by their banks,” the FSA said.
“And CPP overstated the risks and consequences of identity theft during sales of its Identity Protection product.”
Card Protection cost about £35 a year while Identity Protection cost about £84 a year. In total, CPP sold 4.4 million policies and generated £354.5m in gross profit.
Ms McDermott said: “While CPP’s products were relatively inexpensive, they were sold widely and CPP encouraged its sales agents to be overly persistent. This exposed a very large number of customers to the unacceptable risk of buying products they did not want or need.
“Further, we had already warned the firm that it might be misleading customers about a feature of Card Protection from which customers were unlikely to benefit, but insufficient action was taken to rectify this.
“We have highlighted before our concerns about low cost insurance that offers little or no value to the customer. This case shows the action we will take if our warnings are not heeded.”
CPP has estimated that the total costs of the FSA’s investigation will be £33.4m. The compensation figure could change depending on the number of claims CPP receives.
