Home repair and insurance group subject of FSA probe into complaints handling and selling

Jonathan King Homeserve

HomeServe plans to reduce the size of its core UK business with the loss of 250 jobs from its Walsall site.

The job losses in the frontline, call handling and support teams resulted directly from a lower volume of customers, the company said.

In a preliminary results statement for the year ended 31 March 2012, chief executive Richard Harpin said despite a challenging year for the UK operation, HomeServe continued to make good progress in developing its international businesses and today announced the launch of its new operation in Germany.

“We took swift and comprehensive action to address the issues that we identified in the UK and are totally committed to restoring our customer focus,” he said.

“We are strengthening our management teams, retraining staff and continuing to make significant investments in customer service.

“In the UK we are planning to create a smaller, more focused and sustainable business from which to grow.”

UK chief executive Jonathan King (pictured) told Insurance Times the number of customers had dropped 9% over the last financial year and the company expected that number to fall further to 2.2m - 2.4m over the next year as a result of low income businesses and those where there were few opportunities to cross-sell, while focusing on higher value customers.

But he said despite the cutbacks there was room for growth in the UK, and the firm had enjoyed good expansion overseas.

The home repair and insurance group said in the announcement that “historical issues” would be investigated by the Financial Services Authority (FSA), following an internal probe into possible mis-selling.

King said the probe centred on complaints handling, selling processes and governance and controls.

HomeServe said the investigation would take a number of months to complete.

In a separate issue, HomeServe was fined £750,000 by Ofcom last month for making too many silent and abandoned calls to UK customers.

King said the fine stemmed from the use of out sourced calls facilities and as a result the company had decided to stop using them, but was still operating outbound calling, albeit on a reduced basis compared to last year.

The firm has seen sales and shares slide since October after suspending its UK telesales while it revised sales techniques and marketing material.

HomeServe’s adjusted pretax profit rose 8% to £126m for the year to 31 March 2012, in line with analyst forecasts, on revenues up 14% to £534.7m.

Customer numbers across its international business of Spain, France and the US were up 14% in total to 2.2m.

Shares in the FTSE 250 firm, which proposed to raise its final dividend by 10% to 11.3 pence, closed at 227.4 pence yesterday, down 55% on a year ago.