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Homeserve fined £30m by FCA for 'serious, systemic and long-running failings'
Homeserve fined £30m by FCA for 'serious, systemic and long-running failings'
(1 day later)
Home repair insurance business Homeserve has been hit with a fine of over £30 million and ordered to hand millions more to customers after regulators uncovered a mis-selling scandal that exposed “serious, systemic and long-running failings”.
Emergency repairs group Homeserve was today fined £30.6 million by the City regular for mis-selling insurance policies to customers over six years.
The Financial Conduct Authority (FCA) said between 2005 and 2011 the company had a profit-driven culture where targets were met by taking advantage of existing customers.
The penalty is £4 million less than originally expected and follows an 18-month investigation by the Financial Conduct Authority.
In addition to the record fine, Homeserve has paid £12.9 million to affected customers in redress and is expected to pay £16.8 million in total.
The probe covered the mis-selling of household emergency policies between 2005 to 2011, as well as poor handling of customer complaints by the group, whose products include boiler and central heating breakdown cover and insurance against blocked drains.
FCA director Tracey McDermott said: "Homeserve is another example of a firm that has acted without proper regard for its customers over a long period of time.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “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 who paid the price for that.”
"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."
Homeserve, founded by Richard Harpin as a joint venture with South Staffordshire Water, has already paid out £12.9 million in compensation to customers and said it expects to pay out up to £16.8 million. Harpin said: “We have transformed the business by retraining staff. We have worked hard to put customers back at the heart of our business.”
Homeserve said today it had overhauled its management team and systems since the matters came to light two years ago.
The FCA's investigation covered the mis-selling of household emergency policies and poor handling of customer complaints by the company, whose products include boiler and central heating breakdown cover and insurance against blocked drains.
The scandal has already seen it fined £750,000 by regulator Ofcom in 2012 for silent and abandoned calls.
In its ruling, the FCA said Homeserve had "serious systemic and long-running failings, extending across many key aspects of its business".
It said: "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."
The FCA said the pay structure incentivised sales staff to increase the volume of products sold, irrespective of the customer's need for the product.
There was also pressure on staff to close as many complaints as possible, meaning there was a risk that grievances were not handled fairly and customers did not receive appropriate redress.
