Homeserve sets out costs of mis-selling probe

Home maintenance and insurance specialist Homeserve has seen pre-tax profit rise ten per cent in the six months to the end of September, but warned that its customer numbers and income would be hit by its telesales ban over mis-selling concerns.

Homeserve said adjusted pre-tax profit was up to £23.5m, from £21.3m in the same period in 2010, while revenues climbed 25 per cent to £213.1m.

But it said the process of “reinvigorating” its customer focus, which includes developing new sales scripts and re-training sales staff, would cost it an estimated £10m in the second half of the year.

The reduced marketing and sales effort would cut its customer numbers by five per cent and insurance policy renewals income by £15m, it added. It said the finance watchdog the Financial Services Authority had given it “detailed feedback”.

Its shares have fallen more than five per cent on the news.

“We were disappointed to have found evidence of a shortfall in our standards in our UK sales and marketing procedures,” said chief executive Richard Harpin.

“We are taking decisive action to address these issues to ensure that our practices meet the high standards that both we and our customers expect.”

Harpin said the group’s international businesses accounted for two thirds of its total household market and 40 per cent of Homeserve’s 5.1m customers.