Online retailer N Brown; best known for the JD Williams, Simply Be and Jacamo brands is faced with a compensation bill of up to £40million for add-on mis-selling. This relates mainly to the sale of credit insurance products between 2006 and 2014, and comes on top of an earlier penalty of £22.9m for PPI mis-selling, which hit profitability last year.
The fine follows a review undertaken by the FCA into add-on insurance products which were deemed to have little or no value for customers. In February 2017, the FCA also agreed a "redress scheme" with Express Gifts, a subsidiary of Fiindel plc, for insurance products providing inadequate value.
Financial services represent a significant source of revenue for N Brown, which is FCA registered in its own right, although this primarily relates to the provision of consumer credit.
The "third party underwriter" responsible for the products and which partnered with N Brown has not been named in press reports, but the company has suggested that it may seek the insurer's assistance in offsetting the fine.
We believe that the FCA may ultimately look in more detail at the regulatory issues surrounding insurance affinity partnerships and particularly, the ways in which appointed representative (AR) and introducer appointed representative (IAR) relations operate. Regardless of this, the demand for rigorous and effective compliance support has once again been highlighted.