Free Business Dissertations - Report To The Board Of Directors Concerning Ethical Issues In The Selling
Report to the Board of Directors Concerning Ethical Issues in the Selling of Income Protection Insurance.
Table of Contents
Executive Summary .. 2
An Overview of Income Protection Insurance ....... 4
Payment Protection Insurance Examination at Lloyds TSB 6
Conclusion . 12
Bibliography ............. 13
Executive Summary
While the economic growth for the United Kingdom has lagged behind the general performance of countries on the European continent as well as in the United States, Canada and Australia, the overall performance for the five largest banks in the country has been in line with our European peers, America and other regions (Global Association of Risk Professionals, 2005). The bank’s share price has recovered from the dismal lows of late April, 450p, and October, 440p, and surpassed our January year opening price range of 507p in closing above 515p (Lloyds TSB, 2005). A number of business factors have contributed to our strong 2005-year end performance on a comparative basis (Lloyds TSB Group plc, 2005):
Four percent (4%) increase in customer lending to £167.6bn and an increase of three percent (3%) in customer deposits to £130.56bn
Increased new business in life assurance and strong customer growth in many product areas
An increase in economic profits and post-tax return on average shareholders’ equity
Earnings growth in all divisions
Income growth recorded in all corporate divisions
An increase in profit before taxes of seven percent (7%), by 118m to £1,723m
Increase in earnings per share of ten percent (10%) to 22.ip.
Increase in economic profit of eleven percent (11%) to £728m
Increase in average shareholder’s equity from 21.5% to 21.9%
A nine percent (9%) increase in earnings per share to 21.3p.
The foregoing results signify that the institution is performing well in keeping with the results of its peers and the banking community as a whole. It is important to note that the bank is recording negative publicity in the perception of how business is conducted in conjunction with the selling of ‘Income Protection Insurance’ (also known as Payment Protection Insurance or PPI) for loans, credit cards and mortgages. The foregoing is creating a less than desirable public image and perception of Lloyd’s TSB techniques utilised to sell this product. The questions that arise from the foregoing are as follows:
Is the institution flirting with regulatory as well as legal issues that could damage and or impact the banks reputation and public image?
Are our banking practices in the area of the selling of PPI operating in an ethical manner?
Is there a possibility that the bank’s practices in this area require either further examination or inquiry?
Are Lloyd’s activities in this area in keeping with the general practices within the banking community?
Are there potential remedies, modifications or other aspects that should be considered in conjunction with our practices?
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