FCA Hands HomeServe £30m Record Retail Fine

The Financial Conduct Authority has slapped a record retail fine of £30m on insurance broker HomeServe for mis-selling policies and other compliance failings.

The FCA said that during the period January 2005 to October 2011 HomeServe mis-sold insurance policies, failed to investigate complaints adequately and was insufficiently engaged with compliance matters

"This is a serious case, one that has warranted our largest retail conduct fine and generated a sizeable bill for consumer redress. HomeServe is another example of a firm that has acted without proper regard for its customers over a long period of time," said Tracy McDermott, the FCA's director of enforcement and financial crime.

The regulator said that the company has paid approximately £12.9m (€13.2m, $18.1m) to affected customers in redress and is expected to pay them £16.8m.

HomeServe accepted that it needed to restore its customer focus.

McDermott added: "HomeServe promises to provide customers with peace of mind when things go wrong. In fact the firm's culture, controls and remuneration structures meant that staff were focused on quantity not quality and there were customers that paid the price for that."

HomeServe, which has marketed itself as "Britain's fifth emergency service", sells insurance to homeowners covering them against burst pipes, drain blockages and faulty boilers.

The FCA's investigation revealed a systemic mis-selling culture, where the firm's sales force were incentivised by volume of products sold, irrespective of the customer's need for them.

"Firms must put the interests of customers at the heart of their business if we are to restore trust and confidence in financial services," added McDermott.