Homeserve hangs on to customers despite fears over mis-selling of policies

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Shares in home repairs group Homeserve surged yesterday after it said “very few” customers have left the business despite fears it has mis-sold policies.

The firm, which insures three million people in the UK against burst pipes, broken down boilers and electrical problems, is retraining 500 staff after a review revealed sub-standard sales processes.

Homeserve, which is run by chief executive Richard Harpin who commutes by helicopter from his home near York to the company’s headquarters in Walsall, cancelled outgoing calls after the problem was revealed last month but said some retrained staff have now resumed taking incoming calls.

Shares rose 17 per cent, recovering some of their 50 per cent falls when the problem came to light, after it said it was handling claims as usual and had seen few customers cancel policies as a result of the crisis.

Homeserve has started the process of developing new sales scripts but said outbound sales calls will not be resumed until it is fully confident it can meet the required standards.

Homeserve said it has started a review of all complaints it received last winter and will get back in touch with any customers that were not dealt with correctly.

It will also review its direct marketing material, which is due to be sent out in the new year.

The company is understood to be on track to meet City expectations of a 12 per cent rise in profits to £131m for the year to March 2012.

But fears persist that next year’s sales will be hit by the current inactivity of its call staff and that the company may have suffered damage to its reputation.

The Financial Services Authority has been informed and is likely to investigate, which could mean a hefty fine for Homeserve if it is found to have breached rules for the selling of financial prod- ucts.

There is also the possibility of compensation for customers if it is found they have been mis-sold a policy.

In total, the group has more than five million customers spread across its businesses, which also include divisions in the United States, France as well as Spain.