When Is Profit Not Profit?

The Chancellor has given the green light to sell 6% of Lloyds TSB (we’ll still have another 34%) bringing in £3.2 billion. This represents a cash profit of £61 million. So it looks like we are going to get a positive return on the funds that we used to bail out Lloyds TSB.

 

Or are we?

 

Oh, come on. You know the rules by now……don’t be blinded by the lights. Here’s the reality……

 

In real terms, there is no real profit on the deal, after adjustments are made for the cost of locking up all those billions of pounds in shares that didn't pay a dividend for all those years.

 

The simple headline is this……we have given up the use of £3.2 billion of public money for 4 years and in return have received a total return of 1.9%. However, take out the negative effects of inflation (at around 14% for the 4 year period) and deduct the money that could have been made elsewhere with £3.2 billion (the ‘opportunity cost’)……what does that leave us with……a big fat loss.

 

Not too many commentators being vocal on the 20% + loss. Not too many commentators worth their salt me thinks.

 

So there you have it……plain and simple.

 

Don’t be dizzied by the spin.

And The Next Bank Misselling Scandal Is……

Now I appreciate that PPI claims are still being settled and there are still billions to be paid out. However, just to wet your lips for what’s around the corner……

 

The Next Bank Misselling Scandal Is……Premium Banking

 

The Background……

All of the high street banks offer Premium Banking (AKA ‘packaged accounts’) where the customer pays a monthly fee in return for additional benefits ‘exclusive’ to Premium Banking customers. These additional benefits typically include Travel, Mobile and Car Breakdown Insurance.

 

The Issue……

When we look at the PPI issues, credit card / loan customers took out additional insurance (many were forced) to ensure that the monthly debt payment was made in times of sickness or unemployment. However, many of these customers could never make a claim on the insurance as they did not meet the criteria (too old, self-employed, unemployed, too tall, supported the wrong football team, wrong colour shirt, left handed……you get the picture!) and should never have been sold the insurance in the first place. Hence, they were missold.

 

Now let’s look at Premium Banking……you pay a monthly account fee to have additional insurance benefits. Many customers can’t claim on these insurances as they do not meet the criteria:

 

- Many types of holiday are not covered (skiing, Asia, South America, diving)

 

- Mobile could be insured with the telecoms provider or covered under Home Insurance

 

- Car breakdown cover not valid if using the car for work or commuting

Do we really believe the banks have done their due diligence with customers to ensure that they get full benefit from the additional features? I think not. There are literally millions of people paying monthly fees via Premium Banking for insurance they cannot claim on or they are insured identically elsewhere.

 

The next misselling scandal? Damn right.

 

Form an orderly queue please.

 

Surprisingly unsurprising.

 

 

Blue Politics

I want to make something very clear from the start. This is true, it’s not made up and the information has come from a Freedom of Information request.

 

Let’s start at the beginning……

 

Prime Minister David Cameron announced in July that most households in the UK would have pornography blocked by their internet provider unless they chose to receive it.

 

Online pornography was "corroding childhood" and "distorting" children's understanding of sex and relationships, he argued. As a consequence, the UK's biggest internet service providers have agreed to the filters scheme meaning it should cover 95% of homes.

 

All very commendable and morally correct.

 

Which is all the more interesting given the latest data from the Freedom of Information request……confirming more than 300,000 attempts were made to access pornographic websites at the House of Lords over the past year. MP’s, peers and House of Commons officials need to take a long hard look at the contradicting message that this sends out.

It’s not as if Parliament has a background of contradicting stances……like wanting to round up the offshore tax dodgers whilst fiddling their own expenses……or wanting freedom and peace for countries by bombing them to bits to achieve it……or wanting better public services but cutting spending at the same time……and on and on.

 

I guess the only shocking thing on this story is that it isn’t shocking!

 

Shameful.