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Every Which? way to lose

Among the many things I have in common with IFAs is a love of the consumer group Which?

Actually, scrub that – lots of IFAs have a rather ambivalent relationship with Which? despite the fact it has long championed the need for genuine independent advice and was one of the few organisations to come out strongly against depolarisation when mooted by the OFT in 1999.

I, on the other hand, have an enormous amount of respect for the group. For many years, it has led the way in protecting the interests of UK consumers against misselling of all varieties. It took the lead against credit card interest rate charges and has been active in the campaign to halt sales of inappropriate PPI.

Enough praise, here’s my question – why on earth is Which? chief executive Peter Vicary-Smith planning a range of own-brand financial products and services?

In an interview with The Times recently, Vicary-Smith said he wanted to “extend the organisation’s brand” to encourage competition to markets where it is currently lacking. It is considering capital-raising for acquisitions, striking joint ventures with commercial partners or pooling equity to raise funds.

“Which? is a phenomenally well-trusted brand, not just in the areas in which we traditionally operate,” he was quoted as saying. “People would trust us to offer an enormous range of goods, fairly and for a reasonable price.”

The implication of this is that the products Vicary-Smith is envisaging will be in areas where Which? believes there is insufficient competition on price and quality and where choice is otherwise limited.

The danger of this approach is that it offers too many hostages to fortune. Clearly, the kind of organisation Which? seeks to emulate is Saga, which combines a thin veneer of campaigning zeal with an incredibly robust attitude to making money from various business opportunities, admittedly unfocused and disorganised in the case of financial services.

But the problem here is that Which? and Saga are two entirely different entities, poles apart in terms of history and tradition.

The second point, and Saga is a clear example of this, is that if you are planning on entering the financial services you are highly unlikely to be creating your own products.

They will be someone else’s products, white-labelled on your behalf. They might come with a few distinctive bells and whistles but essentially they are manufactured for you by another financial institution, and it is beyond credulity to believe any institution will create products on your behalf streets ahead of its own.

So Which? will end up marketing the financial services equivalent of a Fiat 500, which may look different from the opposition but shares a common platform with the Ford Ka, including its engine. Is that what Vicary-Smith believes will really increase competition in terms of price and quality?

This also begs the question of precisely who will decide what elements of a product are so distinctive compared with its opposition that it should see the light of day? Vicary-Smith? The editorial team at Which? Money? The research team whose work goes into the various magazines?

My guess is that it will be none of them. There won’t be some lovely collegiate chat in which campaigners and consumers get together over a cuppa to design the perfect financial product. Instead, a provider will contact Which? and propose something that, on the surface, is different – but which isn’t really.

The other problem is one of comparisons more generally. Which? has built its brand on the back of comparing products with each other. When I wrote for Which? Money, on a couple of occasions my copy was amended to include a reference to one of the organisation’s online savings and banking comparison services. On the whole, such editing is fine, in the sense that the comparison service it offers is unbiased.

But what happens when Which? unveils a new product? Even if it is a relatively good loan or bank account, any review is likely to be tainted by the assumption that it is being written to order, no matter that it is not. Over time, the trust consumers have in Which? publications will be eroded.

It is for that reason I have to ask whether Vicary-Smith bothered to consult on his plans with his editorial colleagues, including incoming Money editor James Daley or his predecessor Martyn Hocking, who now edits the main magazine. I would be amazed if they were even remotely in favour of such an idea.

Ironically, were Which? to focus on more effective financial product comparisons, allowing consumers to make better searches for the products they need and allying this with a proper forum similar to MoneySavingExpert, it would make more sense both from a financial point of view and also in terms of the organisation’s own ethos.

It is hard to avoid the conclusion that the whole point of this idea is not to improve consumer choice but to monetise its 1.1 million-strong customer base, which mostly consists of affluent, middle-aged people with disposable income.

Is it worth destroying the reputation of an organisation, painstakingly built up over more than 52 years, for the sake of a few quid more in the bank?

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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