After discovering that its insurance products had been missold Homeserve, the emergency repairs domestic insurance company suspended all sales operations, causing shares to half in value on Monday. Describing itself as the ‘fifth emergency service, the company has suspended outbound sales and marketing activity while staff are retrained.
This follows an independent investigation by Deloitte into the selling practices of the company. Deloitte, who are a professional services firm, performed the investigation over the past month. The suspension comes as Homeserve begin marketing insurance cover for burst pipes and broken boilers in advance of winter.
Richard Harpin, chief executive of Homeserve, said that they would resume marketing when they were confident that the sales process met customer expectations. Shares in the company fell 245.3p (51%) to 240p in Monday’s trading.
The company will resume outgoing calls when all staff at the Walsall call centre are retrained. There are slightly over 500 employees at the site near Birmingham, accounting for 20% of the company’s UK workforce, however no time frame for this has been given. The company will continue to take calls from potential clients from Tuesday. The company reported that it had discovered, over the weekend, cases where the sales process did not measure up to required standards.
Homeserve said that it is still on track to reach its agreed profit forecast for year ending 31 March 2012. The company received a 40% increase in calls last year, a record number of enquiries; however aggressive marketing tactics led to customer complaints so the company launched an investigation in December.
This review takes place just as the Financial Regulatory Association turns its attention to consumer protection. They are concerned with various selling techniques adopted by PPI companies and CPP (credit card/identity theft specialists. Homeserve are not under investigation by the FSA at this time.