Homeserve to face FSA probe

Homeserve, the home emergency insurance and repairs group, said that it was facing an investigation by the Financial Services Authority over 'certain historic issues'.

The firm had a torrid year that saw it temporarily suspend its UK sales and marketing activity in October after evidence emerged that some customers did not understand what they were buying.

In its annual results the firm announced: "The FSA has informed us that they intend to investigate certain historic issues".

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"The FSA's investigation will take a number of months to complete," it said.

The stock tanked in late October after the firm announced that it was halting UK operations following a review by audit firm Deloitte found "processes that did not meet the company's required standards."

"We took immediate action to address these issues and have implemented a thorough and extensive change programme in our UK business," said Chairman JM Barry Gibson.

"While this is taking longer and costing more to implement than originally planned, we are pleased with the progress we have made."

In terms of results, the firm had already prepped the market in March that it was trading in line with expectations, so the figures will come as no surprise.

Profit before tax was up 8% to £126m on revenues that were up 14% to £534.7m.

Basic earnings per share leapt 48% to 35.4p and the firm pushed its dividend up 10% to 11.3p.

UK revenue fell by £5.4m to £353.5m, mainly due to the temporary suspension of sales and marketing activity in October.

Total customer numbers fell nine per cent to 2.7m, while policy numbers fell 12% on a year ago to 6.7m.

However, the company said international sales had helped make up for this, including a 23% rise in policies sold in the USA, taking the total there to 1.71m.