View the article online at http://citywire.co.uk/money/article/a537779
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.
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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