Cicutti: Consumer Focus research told us nothing
If there is one thing I have learned over the years, it is that financial services journalism operates on the basis of a set of carefully developed rules of engagement.
A classic example of how the system works can be seen in the way the Consumer Focus watchdog’s report on pension-switching was treated by journalists last week.
Pension churning by sections of the industry, including some IFAs, is a problem. Trail commission, what it is supposedly paid for and how it is earned is an important issue too, as regular readers of this column will know over the years. Product pricing is opaque and excess-ively high in many cases - most of us know this also.
Moreover, what sometimes makes a news story is not so much the basic facts that are expressed in it, but who is saying it. For example, when David Beckham made his return to Old Trafford, his decision to drape a green and gold scarf around his neck on the way back to the changing room delivered a vast amount of publicity to the campaign against the Glazer family’s ownership of Manchester United.
I was not too bothered by the fact that there is not much new information in the Consumer Focus report. Other things concerned me more, including the fact that it made a series of assumptions without backing them up with serious evidence.
This is something Money Marketing editor Paul McMillan has already referred to in a brilliant forensic dissection of many of its key points, which I will not repeat here.
The second was the 95 per cent of it that appeared to be a rehash of information already in the public domain and the clumsy way it appeared to try to stitch together a series of disparate and unrelated themes.
Having Googled the background of the names given at the end of the report, it appears to have been put together by people with almost no knowledge or understanding of the financial services industry and it showed.
The third striking aspect of the report is that both sides in the debate wheeled out the least appetising representatives to score points off each other.
Consumer Focus relied on the watchdog’s recently appointed chairman Christine Farnish to lambast the industry in its press release.
Farnish opined: “Too many consumers are being persuaded to switch their pension into different pension products which may well leave them worse off. Others are signing up to paying trail commission to their adviser for the life of the product - which may be decades - without receiving any tangible benefit.
“The FSA needs to get a grip on this market and tackle consumer detriment as soon as possible.”
Wait a minute, is this the same Christine Farnish who also has a separate day job as public policy director at Barclays Bank? The one who in 2007 staunchly defended Barclays Bank against accusations that it was ripping off its customers through extortionate bank charges.
Back then, Barclays wheeled out Farnish to tell viewers that, contrary to what they had just seen, “We are not in the business of encouraging or condoning inappropriate sales in any way whatsoever.” What had happened was “not in any way representative of the way in which Barclays does business”.
So was it a different Barclays Bank which was fined £7.7m by the FSA in January this year and ordered to pay upwards of £60m in compensation to thousands of retired customers for inappropriately placing their savings in high-risk funds?
Thankfully, and probably aware of her new role at Consumer Focus, Farnish this time managed to stay off the consumer press radar and was not compelled to rise to the defence of Barclays Bank.
Still, if you thought Farnish was not the most appropriate person to comment on consumer rip-offs, how about the industry defender of IFAs? Step forward Aifa director of policy Andrew Strange who told us the report added “very little new information or analysis” to the debate on the provision of financial advice.
Yeah, right, Aifa, the purveyor of new and original commentary on financial services matters.
Nic Cicutti can be contacted via firstname.lastname@example.org