Homeserve in £30m mis-selling fine
Home repair insurance business Homeserve was today fined more than £30 million following a mis-selling scandal that exposed "serious, systemic and long-running failings".
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.
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.
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.
"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 said today it had overhauled its management team and systems since the matters came to light two years ago.
Homeserve revealed last month that it had been told by the FCA to expect a fine in the region of £30 million.
The regulator'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.
Homeserve recently said its efforts to address the scandal and reinforce a ''customer-focused culture'' had seen increased levels of customer satisfaction and fewer complaints.
Chief executive Richard Harpin said today: " We sincerely regret that some customers have been affected by these issues.
"We have transformed the business, rebuilding and strengthening the management team, retraining staff and restructuring systems and controls.
"We have worked very hard over the last two years to put customers back at the heart of our business and we are committed to offering valuable products with a high quality of service."