Fears of FSA rebuke hit shares in HomeServe

| August 23, 2012 | 0 Comments

By
Greg Walton

16:20 EST, 22 August 2012


|

16:20 EST, 22 August 2012

Shares in HomeServe slumped
by almost 14pc yesterday after
renewed speculation that a damming
rebuke from regulators could
trigger a profits warning.

The boiler repair firm has been
under scrutiny by the City watchdog
over claims that it mis-sold
emergency home repair policies.

However, the Financial Services
Authority last night denied any
decision on punitive action had
been taken.

Under scrutiny: The boiler repair firm, led by CEO Richard Harpin

Under scrutiny: The boiler repair firm, led by CEO Richard Harpin

As a result of the
stock’s hammering, the company
was forced to issue a statement
that it had ‘no new news’.

Despite HomeServe’s insistence
that there was no reason for the
plunge in its shares, sources at the
firm were unable to rule out a future
profits warning. If found guilty it
would face a sizable fine.

HomeServe had regained some
ground by the close, finishing
down 13.3p at 218p. The 6pc dive
wiped almost £40m off the firm’s
value.

struggling to repair credibility

struggling to repair credibility

Traders rushed to the exits
early yesterday as more HomeServe shares were traded by 10am
than are normally moved in a day.

The firm suspended its sales and
marketing operations in October
last year as a result of concerns that
the firm’s Complete Cover insurance
policies had been mis-sold to
customers.

The firm, which has
2.7m customers in the UK, was
forced to draft in independent
investigators to probe allegations of
improper tactics and retrain staff.

Their report was highly critical of
the misleading way that Complete
Cover policies had been sold to
customers as upgrades. HomeServe was also fined £750,000 in
April by the communications regulator
Ofcom for nefarious telesales
practices.

Despite this, the
firm posted a 32pc jump in pre-tax
profits for the year to March 2012.

‘Our UK business identified a
number of potential failings in its
sales and marketing,’ said chairman
Brian Whitty.

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