You would have thought that, with most advisers instinctively supporting Ros’s campaign, if only because she is trying to make the Government live up to the same standards that the FSA demands from IFAs, few people could object to my comments. Yet a few days later, an email pinged its way into my inbox.
“You suggest that the Government could hypothetically offer compensation only to those who can ‘prove’ that they were influenced by its leaflets, whereas insurance companies and advisers have to prove that they were blameless and the complainant simply has to copy a standard letter from a website,” it read.
What interests me about the email from my correspondent is not so much the misreading of my comment but his reference to copying “a standard letter from a website”. By coincidence, consumer group Which? revealed last week that more than 250,000 people have downloaded its letter to banks demanding compensation for unfair overdraft fees.
The downloads are in addition to the millionplus downloads of a very similar missive from the MoneySavingExpert website.
An online poll by price comparison website Moneysupermarket found that 87 per cent of its visitors would be making a claim for compensation from banks in respect of excessive overdraft charges levied against them.
Of course, we do not know how many people are actually carrying out these threats. MoneySavingExpert says “thousands” have successfully claimed compensation and it is fair to assume that many more complaints are in the pipeline. While not exactly a consumer tidal wave, it nonetheless represents a very significant step-change in the way consumers relate to their financial providers.
What is striking about all this is the relative ease with which people are able formulate complaints in a way that would have been impossible a decade ago.
Looking back over the past 10 to 15 years, there have been three mass waves of compensation claims involving hundreds of thousands of people – personal pensions, with-profits endowments and overdraft charges. I am not minimising the many other campaigns we have seen in recent years, simply looking at the biggest.
In the case of personal pensions, the original impetus for claiming came from SIB and then the PIA and, finally, the FSA – all regulators. They forced providers and advisers to write to their clients, effectively inviting potential claims against themselves.
In the case of endowments, there were a number of drivers. One was the FSA, which fined life companies and ordered them to carry out reviews of endowment sales. Another was the growth of ambulance chasers which encouraged people to complain. A third was an online letter from Which?, available through its Endowment Action website. My understanding is that tens of thousands of people have successfully claimed compensation as a result of this letter.
This brings us back to banks and overdraft charges. Even the lowest estimates of the number of actual complainants still reveal a step-change in the way that many people are seeing themselves not simply as disgruntled, yet passive, customers but as active participants in a campaign.
It clearly helps that in each of the above cases, the flames have been fanned by the media. Those of us who wrote about personal pensions in the mid-1990s undoubtedly provided the mood music that ensured consumers who received pension review letters actually bothered to fill them in and send them off.
Similarly, with pensions and bank charges, without helpful intervention by journalists, it is unlikely that as many of the claims we are seeing taking place would have been made – and won.
Where does that leave IFAs and the financial services industry? On one level, it makes them more vulnerable than before. The proliferation of consumer websites, as well as blogs, means that any protest gains a much bigger audience at a far greater speed than ever before. It becomes infinitely easier to thrash someone’s reputation.
Equally, this offers companies the chance to listen, redress obvious wrongs and make improvements to their service and product range.
Either way, there is no going back to a time when inertia and ignorance meant financial advisers and providers could get away with murder. Consumer power is here to stay.