Homeserve acts over possible mis-selling of policies

The FTSE 250-listed company, which insures against and repairs burst pipes, broken down boilers and electrical problems, suspended telephone sales last night after a review by accountants Deloitte.

Sales will not resume again until a staff retraining programme for employees had been completed, it added.

The problems were reported to centre on the scripts used by its sales team to explain pricing and policy details.

In a statement, the company said the review highlighted cases where the sales processes did not meet required standards.

Chief executive Richard Harpin, who lives near York, said: “We are determined to ensure customers receive the highest standards of service and we have therefore taken swift action to address the issues identified by our review.

“We have commenced a programme to retrain staff. We will resume marketing once we are confident that our sales processes meet the standards that we and our customers expect.”

The company wants to ensure that scripts and staff provide even greater visibility into the features of its cover product information and pricing.

“This review showed that there were cases where its sales processes did not meet the company’s required standards,” a statement said. “The company has therefore decided to suspend all telephone sales and marketing activity.”

Shares in the group are expected to be hit hard by the news when the company resumes trading, even though it said it remains on track to hit market forecasts for the year to next March.

The company is valued at £1.6bn and had seen its share price more than double over the past three years.

It has more than five million customers and 11.7 million policies across its businesses, which also include divisions in the US, France and Spain as well as the UK.

The Financial Services Authority has been informed and is likely to investigate, which could mean a heavy fine for Homeserve if it is found to have breached rules.

The group, which has offices in London, Preston and Banbury, added that it does not expect any redundancies as a result of the review.