N Brown Group is being forced to dish out £40 million to customers in compensation after they were sold insurance found to be flawed.
The Financial Conduct Authority (FCA) requested a review into general insurance on products, clamping down on schemes which didn‘t offer “value for their customers”.
Following the request, the plus-size fashion retailer N Brown looked into insurance products sold between 2006 and 2014, provided by a third party insurance underwriter, and issued a stock market announcement.
A key aspect of the retailer’s business model is its financial services, in which it allows “customers to either pay us immediately or utilise a credit account for their purchases”.
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“Following an assessment of the cost of potential customer redress, the group expects to incur an exceptional cost in this year’s income statement in the range of £35 million to £40 million,” a statement from the retailer read.
“The cashflow impact of this is forecast to occur from 2019 onward, and the group anticipates funding the full cost of customer redress from existing resources.”
This is the second major hit the retailer, which owns brands Jacamo, Simply Be and JD Williams brands, has taken over selling insurance.
It was forced to pay out £25.2 million in compensation for mis-selling PPI.
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