Insurers left licking self inflicted wounds

Referral fees have long been recognised as a problem. Indeed, the ABI itself has been lobbying for a ban because of the damage they do to the interests of the majority of motor policyholders.

But individual insurance companies have been reluctant to stop soliciting them voluntarily because they have become a key source of income in a very unprofitable area of insurance. Dropping them would put an individual company at a competitive disadvantage. For motor specialists, such as Admiral, the sums involved are believed to be significant.

But the Government, in the form of the Justice Department, turned down the request for a ban, arguing that greater transparency would be sufficient. Cynics suggest that, given the department’s close relationship with the legal profession, which profits handsomely from the practice, the reluctance to take tougher action was hardly surprising.

But Mr Straw’s report dramatically changed the landscape. Faced with popular outrage at the findings, one insurance company, AXA, broke ranks, saying that it would stop receiving fees from personal injury lawyers.

It appeared to be hoping to win some reputational brownie points, in the same way Lloyds did by breaking ranks with the rest of the banking industry over payment protection insurance.

Ken Clarke, the ever flexible Justice Secretary, also seemed to have realised that the ground had shifted beneath his feet and signalled that the Government would consider an outright ban.

So, it looks as if the insurance industry may well get the ban it wants, which is the right outcome for policyholders. But in that case, the industry would get little credit after its hopeless lobbying effort. This was compromised by the companies’ own involvement in the scandal and, in all probability, by their tarnished reputation more generally.

Government ministers aren’t looking too clever, either. How the likes of Philip Hammond, the Transport Secretary, or Mark Hoban, the Financial Secretary, must be kicking themselves for not lobbying for a ban. Instead, the credit would go to Mr Straw, who has played a blinder and would become an unlikely hero among the motorists of Britain.

Next time that Mr Thoresen addresses the ABI conference, he should first check that Mr Straw doesn’t have anything new up his sleeve.

· In September 2008, when my colleague Patrick Hosking predicted that Lloyds’ takeover of HBOS could result in up to 40,000 job losses, Sir Victor Blank, then chairman of Lloyds, dismissed the figure as “ridiculous”. Sir Victor was half-right. It was ridiculously low. The strategy unveiled this week by António Horta-Osório, Lloyds’ new chief executive, involves the elimination of 15,000 more jobs over the next three years, which will take the total loss to 43,000 since the takeover.

Admittedly, not all the job losses are the direct result of the merger. A good chunk will come from efficiencies at the old Lloyds, which AHO — as they abbreviate him internally — says is riddled with silos, duplication and unnecessary layers of management.

So what happened to the famously tight ship run by Sir Brian Pitman and Sir Peter Ellwood? Was it never that tight? Have general standards of tightness increased? Or did it all go to pot under Eric Daniels?

Wherever the blame lies, AHO says there is a mass of cost to come out by breaking down the walls between the bank’s eight divisions. This will also help to get them working together better to boost the number of different products sold to each customer, he says.

Great in theory. Tough in execution. I remember poor Chuck Prince, the hapless “still dancing” former chief executive of Citigroup, telling me he was going to break down the silos six years ago. At much the same time, Lloyds itself had a go, hiring Terri Dial from Wells Fargo, the US cross-selling record-holder. But she failed to repeat the trick at Lloyds or, indeed, at Citigroup, where she went next.

The breaking down of the silos sits somewhat oddly with another strand of AHO’s strategy, making Halifax a more distinct “challenger” brand alongside the more staid Lloyds. But, like much of the rest of the plan, this makes a great deal of sense. Not least, because AHO can turn around to the Independent Commission on Banking and say that you don’t need to break up Lloyds to provide more diversity and competition. Lloyds can be Tesco and Waitrose at the same time.

· Those of us who are a bit lax about ensuring that our cash is earning the best of the (meagre) savings rates on offer may be reassured that we are in good company.

A customer at an ATM in East Hampton, on New York’s Long Island, found that the previous user had left their receipt. This showed that they had withdrawn $400 in cash which, after the $2.75 transaction fee (which must really have hurt), left them with a balance of $99,864,731.94.

The assumption is that the customer was a hedge fund manager who should surely know better than to leave that much in an ordinary savings account. But I guess if you have $100 million you may not care too much about the extra on offer from a Halifax Web Saver Reward account.

· With the economy as soft as a punnet of overripe strawberries and the new Bribery Act (which came into force yesterday) threatening to blow the cream off corporate hospitality, you might think the fizz would have gone out of Wimbledon debentures. Far from it. Evolution Securities, which runs a secondary market in the bonds, reports healthy demand and is quoting the Centre Court debentures at between £60,000 and £66,000, more than double the issue price in 2009.

Holders get the rights to a transferable ticket each day at Centre Court until 2015, at which point the bonds will have a redemption value of just £2,000.

But then, if Murray looks like doing well next year, they could prove a winner.