UPDATE 1-Homeserve says complaints fall as probe continues
* Expects to have around 2.5 mln UK customers at end of Sept.
* Sees HY profit higher than 23.5 mln stg reported last year
LONDON, Sept 26 (Reuters) - British repair and insurance group HomeServe, under investigation by the Financial Services Authority over concerns about mis-sold policies, said customer complaints had fallen as it implemented changes that the regulator had asked for.
HomeServe, which sells cover for and fixes boilers and burst pipes, said on Wednesday that it expected to have around 2.5 million UK customers at the end of September, down from 3 million a year ago, and was on track for its target 80 percent retention rate for the year.
The company also said its operations in France, where it now owns 100 percent of local business Domeo, were performing well, and that on the back of this it now expected its overall adjusted pretax profit for the six months to end-September to be above the 23.5 million pounds it reported last year.
Customer and policy numbers in the UK have tumbled since the group suspended telesales in October last year to address concerns internally over how its policies were marketed and sold, prompting a halving of its share price.
Shares have rallied in recent months on speculation that private equity firms might take advantage of the reduced valuation to launch a takeover.
The FSA probe, which HomeServe said was ongoing and would take a number of months to complete, could result in a fine or compensation for customers.
"We are continuing to implement our business improvement initiatives relating to governance and controls, sales and marketing and customer service all of which are consistent with the feedback received from our supervisory team at the FSA," the company said on Wednesday.
The group is now reducing the size of its core UK business to focus on a smaller number of higher value, longer-term customers as opposed to a high volume of discount incentivized clients.
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