Written by Dave Robson on Wednesday February 22, 2012
PP what ?
The BBC Business website has today added a video on PPI compensation levels. Most of you will know what PPI stands for, at least in the first instance - Payment Protection Insurance.
But the second instance you may be less familiar with - Polly Peck International.
So what’s going on, I hear you ask ?
Payment Protection Insurance
Some of you in the UK have probably submitted claims for this, even if you knew you’d bought it and were happy with its suitability. Go on, admit it. You won’t be alone.
For anyone not familiar, and simplifying matters somewhat, this particular PPI was sold heavily on the back of personal loans. It was designed to protect the borrower, insomuch as if something happened which meant they were unable to maintain repayments, the cover would kick in and do so on their behalf.
Unfortunately, not everybody who had purchased PPI cover was even aware of it, let alone it being appropriate for their needs. As it turned out, this was quite a lot of people. The floodgates opened -the Financial Ombudsman Service received 30,301 PPI complaints in the last quarter of 2011.
Major retail banks have set aside billions of pounds to meet redress commitments. This had a heavy impact on the bottom lines, particularly during 2011.
Polly Peck International
You are more likely to hear about this in the coming months, due to the court case which commenced in January 2012, nearly two decades after it was originally scheduled.
In the 1980’s, this PPI experienced a massive rise to prominence. In less than 10 years, under a growth by acquisition strategy, PPI’s market capitalisation grew from £300,000 to £1.7billion. It held net assets of £845million, had over 17,000 employees and the PPI Group was one of Britain’s top 100 quoted firms.
By June 1990, £305million (equivalent to 80% of PPI’s cash balances) was held in Turkish and north Cypriot subsidiaries. Some months later, the firm went into administration with debts in excess of £550million. It has been reported that when the administrators attempted to recover the money back to the UK, they effectively ‘found no cash at all, just a black hole’.
It has been alleged that business tycoon and former PPI Chief Executive, Mr Asil Nadir, stole nearly £150million from PPI between 1987 & 1990, using a series of complex transactions between offshore companies and subsidiaries in northern Cyprus. He was originally due to stand trial in 1993, but fled back to Cyprus.
Mr Nadir denies all the charges against him.
The Moral of this Story
Ultimately, there isn’t one. Not one which can neatly present itself here anyway. We could start looking at the common issues around corporate governance & ethics, but that would be a whole other blog.
But it is an interesting and convenient confluence of letters, serving to link two high profile stories pertinent to ICA's readership. Undoubtedly, both the PPI sagas will run and run, seeing interesting case studies develop under both the compliance and financial crime banners. Certainly they are worth keeping an eye on.
That said this is a strange coincidence. Anyone out there in marketing or product development might wish to think twice before creating something which can subsequently be abbreviated to PPI.
I should just clarify that I’m not suggesting any association with these three letters will guarantee a spectacular loss or fall from grace, so I wouldn’t encourage any reader to suddenly remove funding or support from the Premier Pineapple Initiative* or similarly named firms / products.
*If you Googled this, shame on you. But you might like to know that there is already in existence a Peter Pan Icecream, Pirates Pension group and something to do with Primate Promotions and Purple Penguins.
Thank you. Your comment is awaiting moderation and should appear on the site shortly.
Required fields are not completed, please ensure all required fields (*) have been filled in properly.
You can leave the name empty should you wish to remain Anonymous.
Help and support
Alternatively contact us on: +44(0)121 362 7534 / email@example.com (Course information)
or +44(0)121 362 7533 / firstname.lastname@example.org (Enrolled learners)
or +44(0)121 362 7747 / email@example.com (Membership)
or +44(0)121 362 7657 / firstname.lastname@example.org (Assessment)
or +44 (0) 121 362 7503 / email@example.com (End Point Assessment)