Emergency home repairs group HomeServe is set to be hit with a bigger-than-expected fine from the Financial Conduct Authority following a policy mis-selling scandal, which caused 200 job losses in 2012.
The company revealed it had received a warning from the Government watchdog advising it faced a penalty total of £34.5 million, with an early settlement discount of 30 per cent, after the 18-month probe into poor complaints handling and mis-selling.
The penalty is significantly higher than the company had expected. HomeServe had previously set aside just £6 million to cover the costs of the fine.
The firm added: “This is higher than the company’s provision and HomeServe is therefore prudently increasing its provision by £30 million. 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 ongoing activities of the UK business are unaffected by this Notice and the business continues to trade in line with expectations.”
HomeServe said matters under investigation by the FCA related to historic sales and marketing, controls and governance and complaints handling.
The company will issue an interim management statement on February 5 when it is set to outline more details about the case.
The company temporarily suspended telephone sales and launched a costly review into its marketing and training processes in October 2011 when it was accused of mis-selling policies to customers.
In April last year, HomeServe was fined £750,000 by Ofcom for breaching rules on silent and abandoned calls and the following month, the-then regulator the Financial Services Authority which was later replaced by the FCA, placed it under investigation.