HomeServe the repair and insurance group, is currently being investigated by the FSA (Financial Services Authority) over claims that it miss-sold its policies to its customers. However, the company stated that as it continues to make the changes that the FSA requested complaints are continuing to drop and they are achieving their goal of meeting the needs of customers.
HomeServe sells cover for boilers and burst pipes and then repairs them for their customers. It is thought to have about 25 million UK customers right now, which is a large drop from almost a year ago when it had about 28 million customers. Despite the drop, HomeServe did state that it was still on track to reach its target retention rate of 80%.
Outside of the UK, HomeServe stated that its French operations are still performing strongly and that they expect to see a pre-tax profit by the close of the six months leading up to September that is stronger than the 24 million pounds they were able to report in 2011.
Policy numbers and customers have continued to drop in the UK over the past year after the group was forced to stop making telesales in 2011 after concerns were raised that the company did not properly market its policies. This caused the share price to almost halve.
However, since then share prices have started to come back up and there is now rumours that private equity firms may quickly try to hoist a takeover while the opportunity presents itself.
The FSA stated that the investigation into the practices of HomeServe will continue for a few months and the end result could be compensation for customers or a fine.