Homeserve Membership Limited

Activities and protection

What they can do, and how you are protected

• Manage or trade investments FSCS may apply
  Eligible investment and pension claims are typically FSCS-protected up to £85,000 per person, depending on the product and your circumstances.
• Sell or arrange insurance FSCS may apply
  Eligible insurance claims may be FSCS-protected, often 90%, or 100% for compulsory or long-term cover.

Check your FSCS cover →

Complaints: You can refer a complaint about this firm to the Financial Ombudsman Service for free, whichever activity it relates to.

Track record

Action taken against them

1 fine in 2014, £30.65m in total. This is part of the official register record and is worth reviewing before going ahead.

• Fined £30.65m on 13 February 2014

  On 12 February 2014, the FCA imposed a financial penalty on HomeServe Membership Limited (HML) of £30,647,400. This penalty is in respect of breaches of Principles 3, 6 and 7 of the FCA's Principles for Businesses, during the period from 14 January 2005 to 27 October 2011 (the Relevant Period). HML agreed to settle at an early stage of the FCA's investigation and therefore qualified for a 30% (stage 1) discount under the FCA's executive settlement procedures. Were it not for this discount, the FCA would have imposed a financial penalty of £43,782,058 on HML. HML is an insurance intermediary, which advises on and arranges home emergency and repairs insurance cover. HML failed to embed a robust culture with adequate focus on compliance and treating customers fairly. In particular, it incentivised volume over quality in sales and complaints handling through its remuneration policy, and its senior management were insufficiently engaged with compliance matters. The FCA has found that HML breached Principle 3 by failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems. In particular: 1) during the period 1 February 2008 to 27 October 2011, HML failed to ensure that its Board gave sufficient attention to compliance issues and took adequate steps to address them, including but not limited to, failing to review and react to compliance monitoring reports that raised serious concerns such as mis-selling and which subsequently led HML, a year after initial concerns had been raised, to suspend all telephone sales; 2) during the period 1 January 2008 to 27 October 2011, HML failed to ensure that its senior management undertook adequate regulatory training, which led to a lack of regulatory knowledge and a failure adequately to identify and address issues that created a risk that customers may not be treated fairly and contributed to a culture that placed more importance on generating profits; 3) during the period 14 January 2005 to 27 October 2001, HML failed to identify and address inappropriate bias within the remuneration structure for the sales teams, which incentivised staff to increase the volume of products sold, irrespective of the customer's need for the product; 4) during the period 1 November 2008 to 27 October 2011, HML failed to identify and address inappropriate bias within the remuneration structure for the complaint handling teams, which incentivised staff to close as many complaints as possible, meaning that there was a risk that complaints were not handled fairly and that customers did not receive appropriate redress; and 5) during the period 14 January 2005 to 27 October 2011, HML failed to have in place adequate IT software and carry out effective tests on its IT systems, which meant that it failed to detect and remedy errors occurring in pricing calculations and in checks for any duplication of insurance cover, and resulted in 34,859 customers being overcharged and 8,796 customers being charged for duplicate cover that they did not need. HML breached Principle 6 by failing to pay due regard to the interests of its customers and treat them fairly with regard to complaints handling. The reason for this is that during the period 13 January 2010 to 13 April 2011, HML failed to have in place an effective customer complaint handling process, which meant that it failed to investigate and resolve all customer complaints fairly, including failing to offer 8,481 customers appropriate redress. Customers, for example, were not always appropriately compensated for the failure of or delay by HML engineers in attending their home, or reimbursed the full cost of having to call out an independent engineer to deal with a home emergency, such as a plumbing emergency in the middle of winter, which should have been resolved by HML. HML breached Principle 7 by failing to pay due regard to the information needs of its clients and communicate infmation to them in a way which was clear, fair and not misleading when conducting telephone sales. The reason for this is that during the period 1 November 2006 to 27 October 2011, HML failed to provide clear, fair and not misleading information to customers about two of its insurance policies at the point of sale, which led to an estimated 69,000 customers being mis-sold these policies. For example, sales agents at HML failed clearly and adequately to explain the comparative price and coverage of these two policies. The FCA considers that the failings identified at HML were serious, systemic and long running, extending across many key aspects of the business. The FCA expects authorised firms to have a robust culture with adequate focus on compliance and treating customers fairly. The FCA also considers that HML's failings were particularly serious given that a significant proportion of its customers were of retirement age and therefore more vulnerable. Following a rapid expansion in the growth of its home emergency and repair insurance business, HML developed a profit driven culture where profit targets were met by taking advantage of existing customers in pursuit of sales. HML accepted that it needed to restore its customer focus and move away from a culture of putting profits before treating customers fairly. To date, HML has paid approximately £12.9 million to affected customers by way of redress in respect of the failings identified by the FCA, and is expected to pay a total of £16.8 million.

Common questions

Frequently asked questions