The common problem with the 406 indicators is a fault on the indicator stalk. Mine 2001 2.0 diesel Rapier started indicating left after a right turn and wouldn't reset! A replacement stalk from a peugeot main dealer cost £45 and was easy to fit. Loosen two screws under the steering cowl to give access. Remove two star head screws holding the stalk in place and slide it out. Remove the two plugs from the unit ( push in small plastic retainers) and fit the new unit. Getting the two pieces of the cowling back exactly right is a bit of a fiddle, but all in all an easy DIY job. Took under 30 minutes.
Dave T
December 2007