Shares in N Brown dropped by as much as 9 percent after the online fashion retailer announced that it had encountered a new £40m hit after discovering problems with a credit insurance product it marketed to buyers.
The retailer of the plus-sized brands Simply Be and Jacamo announced that it was reacting to a restriction by the Financial Conduct Authority on “flawed” insurance products sold on matters such as televisions and furniture.
As an end of reviewing its own merchandises from between 2006 and 2014, N Brown stated that it would have to set away between £35m and £40m as an outstanding cost to this year’s report.
N Brown said that the damage would “not impact its underlying operations, nor the risk profile of the group’s current and future customer or debtor balances”.
Still, it is another hit for N Brown after it recorded a 20 percent decline in revenues in April to £25.2m after having to set aside £25.2m to meet compensation claims for its credit clients related to the long-running PPI misselling event.
N Brown is not the first retailer to have dropped foul of selling important financial products. In March Findel stated that it would have to review a lower calculation and set aside £29m as a preparation for selling flawed insurance products.
The FCA has considered insurance products that had low claims rates as ‘flawed products’ because they were of little importance to customers.
Stock price: BWNG (LON) 284.80 GBX -19.70 (-6.47%)
13 Jul, 4:35 PM GMT+1
Revenue: 818 million GBP (2015)
Net income: 49.4 million GBP (2015)