Pre-tax profits drop 63% after record FCA fine

HomeServe suffered a drop in profits and customer numbers after being slapped with a £30.6m mis-selling fine.

The home emergency broker paid the FCA’s largest ever retail fine for mis-selling policies this February.

It set aside an additional £27.7m because the fine was higher than it had expected. It also made a £19m provision for contacting customers to refund them.

As a result, pre-tax profits fell 63% to £24.4m in the year to 31 March 2014.

Meanwhile, UK revenue slumped 7% to £288m as it lost 200,000 customers.

However the company said the reduction from 2.3m to 2.1m customers was smaller than it had expected a year ago, because of improved retention.  It predicted UK customer numbers would stabilise at at least 2m in 2015.

Group turnover rose 3% to £568.3m, largely thanks to growth in its US business.

Chief executive Richard Harpin said: “We have made good progress in stabilising the UK business by focusing on improving customer service, increasing retention and delivering effective marketing.

“The USA remains our greatest opportunity, and during full-year 2015 we intend to increase investment in marketing and business development to take advantage of this. All our businesses are progressing in line with expectations and we are confident of making further progress in FY15.”