Follow the money (times two)

This isn’t really on topic (re. the complexity of social life), but is definitely on the margins. Indeed, when it comes to things like the housing market explanations like ‘interest rates aren’t high so we’ll be OK’ are trying to create a simple story out of millions of individual experiences. In both this case, and the present one, it’s always interesting to ‘follow the money’.

Now I used to think that ‘cash buyers’ always had the upper hand. After all, I’d rather someone gave me a sum outright than me having to wait for it. How wrong could I be… when buying a car you get a lower initial price if you want credit.

I thought perhaps the dealerships get commission. Well, yes they do, but not in a simple way. The dealership I went to is contracted by VW finance to sell a certain percentage of cars using VW credit. If they achieve their targets, they then get credit from VW to have some new cars before paying for the, saving them interest on their investment.


I’ve also had to think about insurance. I’m sure that the whole world and his/her partner already knows this, but finding out that the insurance market isn’t as competitive as one would think was a shock. The companies I thought I’d try were DirectLine and Churchill. But wait… their web forms are identical. And so it turns out that they are both (and many others) are part of RBS. Not only that, many of them are branded resellers – are these real insurance companies at all?

Churchill, Direct Line, and Privilege are RBS brands. UK Insurance Limited (part of RBS) underwrites the insurance for ’50 household brands’ where other companies have branched out into insurance (Tesco, Virgin etc.) and they also do Green Flag. Sainsburys insurance is esure AKA Halifax Bank of Scotland, so at least there’s competition on the high street. I don’t have figures, but there are reports that HBOS, RBS and Lloyds TSB are over-dominant in the non-life insurance sector, and the ILO ( is concerned about lay offs after M&A activity in this area.

For the consumer (i.e. me) what I can’t stand is the inability to compare different companies without examining them all. What sort of competition is it when the two brands that come to mind first are part of the same company.


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