HomeServe Agrees To GBP30.6M FCA Fine To Settle Investigation

LONDON (Alliance News) - HomeServe PLC said Thursday it has agreed to the final terms of a GBP30.6 million fine imposed by the Financial Conduct Authority relating to the investigation into historic regulatory issues at its UK business.

The home emergency services provider has agreed to the terms of the GBP30.6 million fine following an investigation by the UK financial regulator over mis-selling policies.

The firm had set aside GBP34.1 million for the fine in total. HomeServe confirmed earlier this month that it had set aside a further GBP30 million after the UK financial regulator proposed a higher-than-expected penalty related to certain of the home insurer's past sales and marketing activities and complaints handling.

HomeServe has battled to rebuild its reputation after customer numbers dropped sharply as it temporarily suspended telephone sales and launched a review into its marketing and staff training programmes as mis-selling allegations began. The company said in a statement, "These issues principally related to sales and marketing, controls and governance and complaints handling procedures that were last in operation over two years ago."

HomeServe has agreed to payment as full and final settlement, bringing the FCA investigation and related regulatory issues in relation to the UK business to a close. It added that all of the customers that may have been affected as a result of historic practices will have been contacted by the end of March 2014.

To date, HomeServe has paid approximately GBP12.9 million to affected customers in redress and is expected to pay a total of GBP16.8 million.

By agreeing to settle the fine at an early stage of the investigation, the company qualified for a 30% discount under the FCA?s executive settlement procedures. Without this discount the fine would have been GBP43.8 million.

Tracey McDermott, the FCA?s director of enforcement and financial crime, said, "This is a serious case, one that has warranted our largest retail conduct fine and generated a sizeable bill for consumer redress. HomeServe is another example of a firm that has acted without proper regard for its customers over a long period of time. HomeServe promises to provide customers with peace of mind when things go wrong. In fact the firm?s culture, controls and remuneration structures meant that staff were focussed on quantity not quality and there were customers that paid the price for that."

Richard Harpin, Chief Executive Officer of HomeServe said, "We sincerely regret that some customers have been affected by these issues. We have transformed the business, rebuilding and strengthening the management team, retraining staff and restructuring systems and controls. We have worked very hard over the last two years to put customers back at the heart of our business and we are committed to offering valuable products with a high quality of service."

The company last week said it expects its full-year pretax profit, excluding exceptional items, to meet market expectations as it said its UK business was starting to stabilise following its recent struggles.

Shares in the home emergency services provider were trading down 0.18% at 333.7 pence per share Thursday morning.

By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance

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