HOME repair service HomeServe was yesterday facing a regulatory fine six times larger than it originally hoped over historic claims it mis-sold products to consumers.
The FTSE 250-listed company revealed that the Financial Conduct Authority (FCA) had proposed a penalty of £34.5m, much larger than the £6m the company had originally made provisions for in its accounts.
But the shares rose four per cent as relieved investors bought into the end of HomeServe’s two-year involvement with the FCA.
The allegations refer to historic sales and marketing tactics, governance and complaints handling issues at the company.
HomeServe sells emergency repair services to households and has revenues of about £550m a year.
“HomeServe will now engage in discussions with the FCA to finalise the notice and do not propose making any further comment during these discussions” the company said in a statement yesterday.
A resolution of the issue is expected within the next month.
Brokers welcomed clarification about the FCA’s actions.
“While the FCA investigation is not complete, we believe that a line in the sand has been drawn with respect to any potential fine that the group may receive,” JP Morgan’s analysts said.
UBS analyst William Vanderpump said: “With the conclusion of the historic investigation, HomeServe will now revert to a more normal supervisory relationship with the FCA in our view.”