£30m fine for mis-selling hurts profits at Homeserve

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HOME repair insurance business Homeserve has seen a sharp in fall in profits after it was hit by £46.7m in costs from a mis-selling scandal.

The slump in profits to £24.4m, from £66.5m a year earlier, follows a fine of more than £30m from the Financial Conduct Authority (FCA) for ‘’serious, systemic and long-running failings’’ between 2005 and 2011.

Homeserve has overhauled its management team and systems since the matters came to light two years ago and said yesterday that it had made good progress in stabilising the UK business.

Customer numbers reduced by 200,000 to 2.1 million in the year to March 31 but this was a smaller reduction than the company anticipated a year ago.

It is hopeful of maintaining its customer base at above two million this year as it expects to acquire 300,000 new customers with a retention rate of 82 per cent.

Chief executive Richard Harpin said: “We have made good progress in stabilising the UK business by focusing on improving customer service, increasing retention and delivering effective marketing.”

Shares rose following the update.

Homeserve has 5.5 million customers in the UK, USA, France, Spain, Italy and Germany, with 62 per cent based in overseas markets compared with 54 per cent last year. The UK business delivered adjusted operating profit of £53.4m, against £78.3m a year earlier.