July 16, 2017

When Bankstone News heard that the FCA had rapped a fashion fashion firm over insurance miss selling, we naturally assumed they were talking about BIBA. But, no, in fact it was some other fashion firm. One called N Brown. The one, as it turns out, behind fat-size brands Jack Amo and Simple Bee.

But what on earth, you might be wondering, could a fashion retailer have done to incur the wrath of the FCA? What it had been doing was selling people ‘add-on’ insurance policies they were highly unlikely ever to have the need or opportunity to claim on. Credit insurance policies to be precise.

Products that nobody (or hardly anybody) ever claims on are deemed ‘flawed’ by the FCA, on the basis that although people pay money for them, those people are very unlikely to derive any benefit from having done so. And N Brown had been shifting loads of them.

So many, it seems, that they’ve now set aside between £35m and £45m to cover compensation to customers they’ve inveigled into paying for these flawed credit insurance products. N Brown shareholders have been unimpressed to the tune of an 8% reduction in the firm’s share price.

The FCA appears to have got a bit of a bee in its bonnet about so-called ‘flawed’ insurance products. But what it clearly fails to appreciate that it is only by selling products that nobody’s going to claim on that the insurance industry can afford to sell products that people might want – and crucially be able – to claim on.

It’s like how people whose innate stupidity, laziness and apathy leads them to remain loyal to their insurers from year to year subsidise loss-leader offers for those who dutifully shop around with every annual renewal.

If the FCA insists on seeing people not claiming on a insurance policy as a bad thing, then the outlook for our sector looks bleak indeed.

A version of capitalism where stupid lazy people get protected is like a version of evolution where the least fit get lavish survival support.

It’s a business not a charity, you know!


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