HomeServe, the emergency and repairs giant, is set to pay fine due to mis-selling and poor handling of customer complaints.
The fine comes as the Financial Conduct Agency (FCA) reveals that a range of significant failings within HomeServe have took place between 2005 and 2011, due to a profit-driven nature after relatively fast growth of the business. The failings include inadequate customer complaint handling and frequent mis-selling of insurance policies. In light of the FCA’s findings the organisation is continuing to contact potentially affected customers, many of which are of retirement age and considered more vulnerable, to establish whether anything can be done to improve the situation. So far the business has paid out over £10m in compensation to customers and they are expected to pay out over £15m.
FCA director of enforcement and financial crime, Tracey McDermott, said:
“Firms must put the interests of customers at the heart of their business if we are to restore trust and confidence in financial services.”
£30.6m is the largest retail fine to date and represents the huge issues surrounding many of their business practices in recent years, prior to this the largest fine was £28m paid by Lloyds Banking Group in 2013. In addition to mis-selling insurance policies and poor complaint handling, HomeServe have also failed to possess and make use of appropriate IT systems and software fit for purpose for the business; leading to the overcharging and duplication of customer accounts.
“Homeserve is another example of a firm that has acted without proper regard for its customers over a long period of time.”
The organisation settled the investigation with the financial conduct agency at an early stage and as a result were eligible for a 30% discount as part of the to the total fine amount as one of the FCA’s executive settlement procedures, reducing £43.7m to the final £30.6m. As a result of the controversy surrounding the business, shares dropped 1.2%.