Shares plunge at Homeserve on FSA probe
AROUND £200m was wiped from the value of repairs group Homeserve yesterday after it said the City regulator had launched a probe into mis-selling claims.
The stock closed down by nearly a third after it confirmed the Financial Services Authority would investigate “certain historic issues”.
The inquiry, which Homeserve said would take “a number of months”, comes after the home maintenance and insurance provider suspended its UK telesales and put staff on a retraining programme.
“The identification of the regulatory issues in our UK business in October 2011 has made this the most challenging year in Homeserve’s history,” said chairman Barry Gibson.
The reforms are extensive but are taking longer and costing more than originally planned, he added.
The firm, which has now started to phase back in its UK sales and marketing activity, posted an eight per cent rise adjusted pre-tax profit to £126m as revenue leapt 14 per cent to £534.7m for the year to 31 March.
It wants to shrink its UK business, however, from 2.7m customers to between 2.2m and 2.4m. It hopes to limit the turnover of customers and focus on higher value policies on core products instead of discounted offers.
“In the UK we are planning to create a smaller, more focused and sustainable business from which to grow,” said chief executive Richard Harpin.
The number of international customers jumped 14 per cent to 2.2m.
The group also said it would cut 250 jobs, however, on top of the 200 announced in February.
Shares closed down 29 per cent at 160.9p.