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Homeserve shares plunge on mis-selling claims

Shares in the home repairs firm slump after it suspends all telephone sales amid claims of mis-selling.

 
Homeserve shares plunge on mis-selling claims

Shares in Homeserve (HSV.L) plunged more than 50% this morning after the home maintenance firm suspended all telephone sales and marketing staff amid claims of mis-selling.

An independent investigation by accountants at Deloitte into the company, which provides some 5 million customers with cover against home emergencies such as broken boilers and burst pipes, found that in many cases its UK telephone sales processes were sub-standard.

Following Deloitte’s findings, Homeserve immediately suspended all telephone sales and marketing activity until some 500 staff have undergone retraining.

Homeserve said customers making a claim or renewing their policy will be unaffected by the decision, and added that it will be able to start taking ‘inbound calls’ again from tomorrow.

However, the company will not recommence ‘outbound’ sales calls to customers until it is confident staff have been retrained and that sales procedures have improved.

Richard Harpin, chief executive of Homeserve, said: ‘We are determined to ensure customers receive the highest standards of service and we have therefore taken swift action to address the issues identified by our review.

‘We have commenced a programme to re-train staff. We will resume marketing once we are confident that our sales processes meet the standards that we and our customers expect,’ he added.

Homeserve’s results for the six months ending 30 September 2011 will be announced on 22 November. The firm assured investors that it ‘remains on track to achieve the consensus market forecast profit’ for the full year ending 31 March 2012.

Homeserve added that it has informed the Financial Services Authority (FSA), which could fine the company if it has breached sales regulations, of the measures it has taken.

In July Ofcom accused energy giant Npower and Homeserve of breaching the rules around silent and abandoned calls, warning them that they could each face a fine of up to £2 million. 

Ofcom said it has reasonable grounds to believe the pair ‘persistently misused’ electronic communications, making an excessive number of abandoned calls to customers between 1 February and 21 March 2011.

Homeserve shares have since pulled back, and after hitting a low of 328p earlier in the day, are now sitting at around 341p – a loss of 30% or 144p.

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11 comments so far. Why not have your say?

Dragon Aunt

Oct 31, 2011 at 13:45

Homeserve is a non-stop menace. However many times I tell them that i NEVER insure domestic appliances they continue to harass me.

My advice: Don`t have anything to do with them; keep a piggybank and pay for repairs yourself - and still be quids in.

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Adam Eve

Oct 31, 2011 at 14:11

I know nothing about this company BUT I DO know about selling , its my bet that their sales staff are on some sort of commission.

THEREFORE DESPITE retraining you WILL get mis-selling.

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Martin Drew

Oct 31, 2011 at 14:27

I find that I do have policies with Homeserve, but I got them through Thames Water I think. I have a house I now rent and as I used to be abroad a lot I needed cover for emergencies like a broken boiler etc. so the tenenant could call and get the problem sorted. As far as I know the tenant never called them. They had special arrangements for landlords when most such companies didn't want to know. Now I see other companies advertising these services for landlords and so maybe I should do some checking to see if I am getting a good deal. They seemed to be efficient enough, but as it was me who approached them I suppose it couldn't be a case of misselling!

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Mark Mathieson

Oct 31, 2011 at 14:56

In reality, they are probably little different from all the rest - commission driven sales growth is bound to lead to sharp practises by salesmen and their managers. The key point may be whether the Homeserve board have 'turned a blind eye' until rumbled, or have acted quickly now as soon as they found a problem. Will we ever find out.....

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Harry S

Oct 31, 2011 at 16:46

In March this year I abandoned British Gas and took out a contract with Homeserve for complete cover with heating.

On 7th July an engineer from the company inspected my boiler and found no fault with it.

On 25th August I was told that the engineer confirmed that they were no longer able to source the parts required for my boiler. I contacted the boiler manufacturer who revealed that there was only one part not available, but in reply to a letter from me I was told my boiler was on their non acceptable boiler list. In spite of that list they entered into the contract and accepted payment. Fortunately I have had no problem with my central heating but it is clear that I had no cover in spite of being charged for it. I am expecting a refund, but am unable to get a reply from the company.

Maybe there is light at the end of the tunnel now.

I am now safely back in the hands of British Gas!

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White Stick follower

Oct 31, 2011 at 16:51

The cover sounds good, until you read the exclusions. My elderly Aunt had one of these policies, and had done so for a great many years. Apparently they did fix a dripping tap and a slightly leaking header tank overflow, neither of which could be called an emergency (no doubt a minor blockage or fragment of grit or similar in the inlet valve). Premium? £328 per year!! I cancelled the policy, Saga, with whom she held Home & Contents insurance offered much the same cover- for £79.64. The policy includes a £200 contribution to a new boiler and a guaranteed maximum 4 hour response time for emergency calls. For the avoidance of doubt ,I don't have any interest in Saga, neither do I recommend or advertise for Saga..

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Guy Thompson

Oct 31, 2011 at 18:00

The trouble with Homeserve, as I know to my cost, is that they seldom cover what is needed.

I have only kept the minimal cover for dripping taps (that's probably also too expensive, but I haven't researched alternatives). For anything more difficault I use a plumber who was a former Homeserve contractor, but has built his own business from doing the work Homeserve refuses. As he says, a Homeserve policty is not worth the paper it is written on.

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hornbeam_1

Oct 31, 2011 at 19:20

Homeserve have a brilliant marketing strategy of being 'introduced' by a utility co, in my case Severn Trent. I have a couple of policies with them, no complaint really when called out. But when they try to push other products at you or increase my cover as an existing customer it gets somewhat tedious, I told them to 'push' off.

Still kept existing policies.

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iain ferguson

Nov 01, 2011 at 00:33

I THINK THIS WILL HAVE TO GO A LOT FURTHER, I AM CONSTANTLY GETTING LETTERS FROM SCOTTISH WATER AND WHEN I OPEN IT WHAT IS INSIDE THE ENVELOPE A LETTER FROM HOMESERVE SURPRISE SURPRISE. THIS IS FRAUD AND IT SHOULD NOT BE ALLOWED. ALSO I WOULD SAY MY WIFE AND I GET AT LEAST ON AVERAGE 10 PHONE CALLS A WEEK ASKING TO GO ONTO THIS SYSTEM AND WE CAN COVER YOU FOR THIS AND THAT. ONCE BITTEN TWICE SHY THEY TELL NOTHING BUT LIES

NOT A FIRM TO DEAL WITH GOODBYE HOMSERVE FOR GOOD

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James Keble

Nov 01, 2011 at 18:31

This is a nasty shock as I have a combined policy for electricity, water pipes etc.

They dealt fairly with me when I had a leak, but it only required a new ball cock and a proper joint. No idea there were people with such strong feelings. Shall study alternatives

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over65er

Nov 01, 2011 at 21:54

I tried on two occasions to make a claim but i was fobbed off so i cancelled everything

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