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Crazy Situation (A&L - Example)

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  • Crazy Situation (A&L - Example)


    Ok heres the example - all figures have been pulled from the Link above.

    A&L sell 211,000 PPI policies between 14 January 2005 and 31 December 2007.

    All of the policies were single premium and the average cost of a policy for a four year term over the Relevant Period was approximately 1,265 (including interest of approximately 210),

    Generating a net PPI income for the firm of approximately 135 million.

    Fine by FSA was 7 million (30% reduction for early payment) on 6 October 2008.

    Lets assume a very generous 50% of people claim refunds, so 67.5 million

    Now interest on 135 million, lets say roughly 4%pa to allow for variances (annual compounding only) but in reality its likely to be at least 2% higher.

    So we have interest of 1.69 million (rounded)

    Income 135,000,000
    Interest 1,690,000
    Refunds -67,500,000
    Fine -7,000,000
    Net Profit 62,190,000

    So despite everything they made 62 million PROFIT from mis-selling a PPI policy, wheres the dis-incentive to not do this again?????

    Am i crazy to think this is crazy??
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  • #2
    Re: Crazy Situation (A&L - Example)

    Did they 'buy' the insurance from a third party or did they use an in house insurer?


    • #3
      Re: Crazy Situation (A&L - Example)

      It doesnt stipulate that in the FSA Report



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