Homeserve suspends telephone operation

The FTSE 250 company said on Saturday it had halted all telephone sales after launching a review and commissioning a report from advisers Deloitte into possible mis-selling of products.

Homeserve, which insures against burst pipes and broken boilers, said it wants to ensure scripts used by sales staff are clearer around products and pricing.

The company, which calls itself the ‘fifth emergency service’, added it will not resume telephone sales until staff have been re-trained. The company said it is also revisiting some unrelated customer complaints made last winter. Homeserve shares shed 135.3p to close at 350p.

The company added it has been in regular contact with the Financial Services Authority.

Chief executive Richard Harpin, who lives near York, said it will only resume sales calls once they “meet the standards that we and our customers expect”.

York-based credit card insurer CPP revealed in March the FSA is investigating “alleged failings” in its sales calls for identity theft products. The probe sent its shares diving, and has yet to be resolved.

Liberum Capital analyst Joe Brent said: “Investors will fear another CPP (but) there are some key differences... Homeserve have initiated the review themselves and are not stopping selling products.”

Brewin Dolphin analyst Mark Fleetwood added: “We do not believe the business model is broken.”