Home repair insurance business Homeserve was yesterday fined more than £30m 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 £12.9m to affected customers in redress and is expected to pay £16.8m 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 yesterday 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 £30m. 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.”