N Brown hit by £40 million compensation bill for 'flawed' insurance products
In a statement, N Brown said it had identified flaws in certain general insurance products which were provided by a “third party insurance underwriter” and sold by the group to its customers between 2006 and 2014.
The announcement follows a review prompted by a recent industry-wide request from the FCA that firms ensure that general insurance products and add-ons offer value for their customers. N Brown said the vast majority of the products were sold to the group's customers in the period leading up to, and including, 2011. Sales of the relevant products ceased in early 2014.
Following an assessment of the cost of potential customer redress, N Brown now expects to incur an exceptional cost in this year's income statement in the range of £35 million to £40 million.
The group will fund the compensation through existing resources.
N Brown said: “The group confirms that this matter will not impact its underlying operations, nor the risk profile of the group's current and future customer or debtor balances. The group continues to demonstrate strong underlying trading performance in line with its 20 June 2017 trading statement.”
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