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Richard Harpin prepares Homeserve insurance firm for £34.5m fine
A YORK businessman is preparing his international insurance firm for a hit of £34.5 million as it is penalised over a mis-selling scandal.
The fine, set to be imposed by the Financial Conduct Authority (FCA), is more than £30 million above what Homeserve had expected to pay.
The Walsall-based business, which provides maintenance services to 4.9 million households in the UK, United States, Spain and France, was founded in 1993 by University of York graduate Richard Harpin.
Mr Harpin, who still lives in York, and is Homeserve’s chief executive, has remained tight-lipped about the fine.
However the company has released a statement, which reads: “HomeServe announces receipt of the Financial Conduct Authority’s Draft Warning Notice relating to the investigation into historic regulatory issues at HomeServe Membership Limited.
“These issues principally relate to historic sales and marketing, controls and governance and complaints handling, in line with our previous announcements.
“The notice proposes a financial penalty of £34.5 million, assuming an early settlement discount of 30 per cent.
“This is higher than the company’s provision and HomeServe is therefore prudently increasing its provision by £30 million.
“HomeServe will now engage in discussions with the FCA to finalise the notice and do not propose making any further comment during these discussions.
“The ongoing activities of the UK business are unaffected by this notice and the business continues to trade in line with expectations.”
The FCA probe looked into mis-selling of household emergency policies and poor handling of customer complaints by the company, whose products include boiler and central heating breakdown cover and insurance against blocked drains.
The scandal has already seen Homeserve fined £750,000 by regulator Ofcom in 2012, following allegations that call-centre staff were calling customers then abandoning the line, leaving potential customers with with a silent call.
The £36 million set aside by Homeserve for the fine is in addition to £40 million already put by to cover compensation for customers.