Damning statement from regulator as HomeServe mis-selling fine settled at £30.6m

WALSALL-based home emergency business HomeServe has agreed the terms of its mis-selling fine with regulator the Financial Conduct Authority (FCA).

It will pay £30.6m, some £3.9m less than the figure the FCA suggested last month.

It is the FCA’s largest ever retail fine and comes hand in hand with a damning statement describing HomeServe – at the time – as a company that had “serious, systemic and long running failings, extending across many key aspects of its business”.

The mis-selling scandal cost HomeServe £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.

HomeServe has agreed to a fine of £30.6m in full and final settlement.

All of the customers that may have been affected as a result of mis-selling practices will have been contacted by the end of March.

This brings to a close the FCA investigation and related regulatory issues in relation to the UK business.
 
Richard Harpin, chief executive officer at HomeServe said: “We acknowledge the FCA’s Final Notice which brings its investigation to a conclusion. 

“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 FCA found that HomeServe had “serious, systemic and long running failings, extending across many key aspects of its business”. 

The regulator said that during the period January 2005 to October 2011 it mis-sold insurance policies, failed to investigate complaints adequately, its board was insufficiently engaged with compliance matters and its senior management were reluctant to address risks to customers if there was a cost implication involved.
 
“Following a rapid expansion in the growth of its business, HomeServe developed a profit driven culture where profit targets were met by taking advantage of existing customers in pursuit of sales,” it said. 
 
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 focused on quantity not quality and there were customers that paid the price for that.”