On Monday shares in Homeserve, the domestic emergency repairs company, fell by over 50%. The company also sells home insurance and the plummeting value of the shares came after it was discovered that insurance policies were being mis-sold. After this was discovered the company has stopped all sales operations and is investigating the problem.
The mis-selling was discovered after the accountancy firm Deloitte were investigating the selling practices of the company. All operations, including incoming and outgoing calls have ceased while the company fix the problem and work on retraining their staff.
The discovery has come at a very bad time for Homeserve as now is the time of year that they are starting to sell their insurance for boilers and pipes that are likely to break down in the winter period. Richard Harpin is the Chief Executive of the company and he has recently commented, “Marketing is going to resume after we make sure that our sales team are meeting the standards that our customers need and deserve.”
20% of the company’s workforce is based in a call centre near Birmingham and all of these people are being retrained before the company continues its operations. The company has acknowledged that in this part of its operations it has fallen below the standards that it expects.
Despite the setback it is expected that the company will still meet profit expectations for this period. Last year, the weather conditions were so bad that the number of people claiming on their insurance with Homeserve was at a record high.
The company has said that this incident is isolated and it will be easily fixed and its operations will continue without too much hindrance. The company has stated that they are in touch with the FSA but that they are not being investigated by the Association.