Homeserve fined £34.5m for ‘mis-selling’
Monday 13 January 2014
Homeserve was today handed a £34.5 million fine by the City regulator after an investigation into alleged mis-selling at the emergency repairs group.
The penalty from the Financial Conduct Authority was higher than the company expected, even after a 30% discount for early settlement.
However, shares still rose more than 3% as analysts claimed Homeserve was close to putting the issue behind it.
HomeServe, which provides cover for household emergencies such as broken boilers, suspended all its telephone sales and marketing operations back in 2011 after an independent report found call centre staff were mis-selling products.
The company has since cut jobs, overhauled its rules and regulations and also received a £750,000 fine from Ofcom.
“The ongoing activities of the UK business are unaffected by this notice and the business continues to trade in line with expectations,” Homeserve said in a statement.
Liberum Capital today raised its target price on Homeserve’s shares from 250p to 330p.
The broker added that it believes “Homeserve has taken a major step in putting regulatory issues behind it… UK customer growth is ahead and cost savings are on track. There is modest growth in France with high retention and strong US customer growth.”
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