Mis-selling inquiry by watchdog sparks shares crash at HomeServe
Shares in HomeServe crashed nearly 30 per cent yesterday after it admitted the Financial Services Authority (FSA) is investigating it in a potential mis-selling scandal.
Britain's biggest emergency plumber and electrician company had already admitted the debacle will cost up to £35m over the next two years, but has always insisted it was working with the watchdog rather than being investigated.
Yesterday, however, HomeServe said: "The FSA has informed us that they intend to investigate certain historic issues. The investigation will take a number of months to complete."
The news saw its shares plunge 66.5p to 160.9p, taking them down 67 per cent since October, when HomeServe first flagged up problems in the way staff sold its Complete Cover product.
That means the paper value of chief executive and company founder Richard Harpin's 12 per cent stake is down by a huge £118m – his 39 million shares are now worth less than £70m, down from nearly £190m last autumn.
The chairman JM Barry Gibson said the past year had been "the most challenging in HomeServe's history".
The investigations into the company's sales techniques were "taking longer and costing more to implement than originally planned," he added. As a result, HomeServe set out plans to slash the size of its UK business to create "a more sustainable business from which to grow".
The group responded to the potential mis-selling by suspending all telephone sales and marketing activity.
Last month, HomeServe had more damaging evidence of problems at its call centres when the regulator Ofcom fined the company £750,000 for making 50,000 silent or abandoned calls to UK households in just two months.
Despite that, HomeServe reported adjusted, pre-tax profits up by 8 per cent to £126m for the year to April.
Also yesterday, the company said it had hired Johnathan Ford – currently finance director at Aim-listed agriculture company NWF Group – as its finance director.
He is expected to join HomeServe in October, succeeding Martin Bennett, who became the group's chief operating officer in January.
- 1 Crystal meth addict 'gouged out his eyes and ate them' while high on drug, Australian MP claims
- 2 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 3 Group of students refused entry to Leicester nightclub 'because they are black'
- 4 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
- 5 Arsenal fan asks the Queen for tickets to the FA Cup final - gets a reply from Buckingham Palace
Ireland's same-sex marriage vote: Dublin in party mood ahead of historic poll result
Saudi Arabia 'seeking to head United Nations Human Rights Council'
The ten most unequal developed countries in the world
Toddler throws a tantrum at the White House – in front of Barack Obama
Irish people are travelling home from all over the world so they can vote to legalise gay marriage
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...