The broker will increase its provision by £30m as a result of the penalty

HomeServe has been issued with a £34.5m fine by the FCA for mis-selling its insurance policies.

The fine, which assumes a 30% early settlement discount, follows a two-year investigation by the FCA (formerly the FSA) after accusations of poor complaints handling in the winter of 2010 and possible policy mis-selling.

The home emergency insurance broker said it would have to increase its provision by £30m as a result of the fine.

The company set aside a £6m provision in March 2013 to meet the costs of the investigation and a fine, and a further £19m in November to pay for the cost of re-contacting customers who may have been mis-sold policies.

HomeServe said in a statement: “The ongoing activities of the UK business are unaffected by this notice and the business continues to trade in line with expectations.”

HomeServe will issue its interim management statement on 5 February.