N Brown shares shrink after £40 million hit on insurance products

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N Brown stakes fell by 6 per cent after the clothes retailer was forced to pay out compensation

The most recent provision by the Jacamo and Simply Be group, which has already taken a £25.2million hit for payment preservation mis-selling, relates to product insurance. 

The FTSE 250 company guessed it had “identified flaws in certain general insurance products” provided by a third set underwriter and sold by N Brown to customers between 2006 and 2014, when sales finished. 

It reckon ons to incur an exceptional cost of £35-40million. 

Adam Cochrane, an analyst at UBS, responded: «This is a legacy issue but clearly highlights the FCA’s focus. 

«In our view, potential areas of concern are that 1) there may be assorted legacy issues to come; and 2) there is a risk the FCA could look at at the profitability of the faith book and whether the interest rate charged by N Brown offers value for currency. 

«This would depend on the profitability of the book and alternative credit providers. 

«This, we swear by, is a key concern for the N Brown group given its materiality to group profits.»

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