A CREDIT card insurer, which needs £40m to repay lenders, has revealed annual losses of £20m.

CPP, in York, which was previously fined £10.5m for mis-selling products, says it continues to face significant financial challenges after seeing a drop in customers.

The firm, which is one of York's largest private employers with about 900 workers in its city offices, says fewer people signed-up or renewed policies last year, resulting in sales falling 10 per cent to £270m.

The company, founded more than 30 years ago by entrepreneur Hamish Ogston, sells wallet, mobile phone and card protection through banks and building societies.

It said the £10.5m fine from the Financial Services Authority had impacted on customers, with renewals down from 75.4 per cent to 73.3 per cent and live policies falling 10 per cent to £9.9m.

Earlier this year, CPP was given until September 30 to repay lenders after its debt arrangement expired following an 18-month investigation into mis-selling, which led to the loss of a number of contracts.

The mis-selling scandal ran between 2005 and 2011, during which CPP sold about 4.4m policies and renewed nearly 19m.

It recently set aside £51.7m to cover the fine and customer compensation, but said that figure could increase further in the future.

Paul Stobart, CPP chief executive, said: “The fall-out from the investigation has been considerable.

“Our reputation with business partners has been damaged, we have lost a number of important contracts in the UK, and our growth prospects have been impacted.”

Last month, it revealed founder Mr Ogston had made an offer to take over the company.

Mr Ogston, who still owns nearly 60 per cent of the business, is believed to have made an initial offer to buy the business for 1p per share, in a deal worth about £1.7m.

It also said it was looking to sell its North American business in a £26m deal to AMT Warranty to raise funds.

Speaking after the announcement, Mr Stobart said: “The board has given extensive consideration to a broad range of strategic and financing options and believes the proposed disposal of CPP North America to be in its best interests.

“While our performance continues to be affected by the on-going challenges of our operating environment, we are well advanced in implementing an extensive business transformation programme.”