Jan 13 Repair and insurance group HomeServe Plc
said it received a notice from UK's financial regulatory
authority, proposing a penalty of 34.5 million pounds ($56.87
million) relating to alleged mis-selling practices.
HomeServe said the proposed penalty, which assumes a 30
percent discount for early settlement, was higher than the
company had budgeted.
The company, which has been under investigation by UK's
Financial Conduct Authority since last May, said it would engage
in discussions with the regulator to finalise the notice.
"We believe the fine is much larger than anticipated and is
worth 9 pence off the price of the stock on a purely cash out
basis," Numis analyst Mike Murphy said, downgrading the stock to
"hold" from "buy". It has a price target of 286 pence on the
However, Liberum analysts raised their rating on the stock
to "buy" from "hold", saying HomeServe has taken a major step in
putting its regulatory issues behind it. The brokerage also
increased its price target on the stock to 330 pence from 250
HomeServe, which provides customers home repair services
such as plumbing, central heating and air conditioning under
12-month contracted memberships, said ongoing activities at its
UK business remained unaffected by the notice.
HomeServe, formerly known as Fastfix, was investigated by
Britian's telecoms regulator Ofcom in 2012, on allegations that
its call centre staff were calling customers and then abandoning
the calls, leaving potential clients with a silent line.
Following the allegation, the British company laid off 200
employees. Ofcom imposed a fine of 750,000 pounds on HomeServe.
Shares in the company were up about 4 percent at 293 pence
at 0903 GMT on the London Stock Exchange.