N Brown Group must now pay some £35-£40 million to its customers in compensation after having been found to have sold insurance with limited value.
This follows a review requested by the Financial Conduct Authority into general insurance on products in its clampdown on schemes that failed to offer value for their customers. The mail order and online retailer had been asked to undertake a review of insurance products it sold between 2006 and 2014, provided by a third party insurance underwriter.
N Brown Group has, for decades, relied heavily on its “send no money now” statement which appears in much of its advertising and encouraged consumers to open credit accounts that attracted above average interest charges, which in turn provided a strong additional revenue stream. This enabled the group to compete with its larger agency-based mail order businesses which attracted customers, like Littlewoods which now trades as Shop Direct, who were unlikely to hold credit cards but who preferred to pay for goods in instalments. In its last financial report, N Brown Group showed earnings of £265 million from credit charges.
N Brown Group has already compensated customers to the tune of £25.2 million for the mis-selling of PPI.
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