Financial News

  • 14 January 2014, 7:59

HomeServe Faces £34.5m 'Mis-selling' Fine

The emergency maintenance firm HomeServe has been told it faces a £34.5m fine amid a regulator's inquiry into alleged mis-selling and poor complaints handling.

The penalty - set to be imposed by the Financial Conduct Authority (FCA) following an 18-month investigation - is significantly higher than the company had expected and is believed to be a record figure for such a firm in the retail financial market.

HomeServe, which sells insurance for and fixes homeowners' boilers and burst pipes, had previously set aside £6m but confirmed on Monday a further provision of £30m to cover the costs of the fine.

On receipt of the FCA's Draft Warning Notice, the company said it was now engaging in discussions with the regulator to finalise the Notice.

HomeServe said the proposed penalty of £34.5m assumed an early settlement discount of 30% and it would not comment further until the talks were completed, which could take months.

The company temporarily suspended telephone sales and launched a costly review into its marketing and training processes in October 2011 when it was accused of mis-selling policies to customers.

In April last year, HomeServe was fined £750,000 by Ofcom for breaching rules on silent and abandoned calls and the following month, the-then regulator the Financial Services Authority which was later replaced by the FCA, placed it under investigation.

It is unclear how many policies are affected by the FCA inquiry and whether anyone would be entitled to compensation.

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