HomeServe faces higher-than-expected fine of £34.5m for mis-selling scandal

HOME emergency and maintenance group HomeServe faces a higher than expected fine from watchdog, the Financial Conduct Authority, following a mis-selling scandal which rocked the Walsall company.

HomeServe said in a statement today that it had received a draft notice from the FCA warning that it faced a financial penalty of £34.5m relating to the scandal.
The fine assumes an early settlement discount of 30%, added HomeServe.

The mis-selling scandal cost the business £24m and led to 200 job losses in 2012. The problems began in October 2011 when the company suspended its sales and marketing activity after a business review identified problems over the mis-selling of policies to customers.

Responding to the fine warning, HomeServe said: “This is higher than the company’s provision and HomeServe is therefore prudently increasing its provision by £30m.
“HomeServe will now engage in discussions with the FCA to finalise the notice and do not propose making any further comment during these discussions.

“The ongoing activities of the UK business are unaffected by this notice and the business continues to trade in line with expectations.”

It said the issues under investigation related to historic sales and marketing, controls and governance and complaints handling.

In November the group was forced to allocate a further £19m to compensate customers affected by the mis-selling scandal after under-estimating the number of people needing to be reimbursed.

The company could shed more light on its position when it issues an interim management statement on February 5.