Nic Cicutti: Why Which? should never have got involved in financial services

Lessons can be learned from the failure of the consumer group’s foray into offering financial products

What are we to make of the news last week that Which? is planning to close its mortgage broking and insurance advice businesses? Dozens of staff are likely to lose their jobs at the two subsidiaries when they shut their doors in the next couple of months, and the jury is out on the survival of Which? Financial Services, which employs 130 people and made a loss of £2.7m in the year to 30 June 2018.

Doubtless, there will be a few advisers who, if not literally rubbing their hands with glee at the news, will be feeling a quiet sense of vindication at the fact a sometimes-sanctimonious critic of their own work is now in serious financial difficulties. Let me say at the outset that I feel desperately sorry for staff at the two businesses whose closure is imminent. Hopefully, the best in both will be able to find new roles with some of their erstwhile rivals.

But I can’t help feeling that the 10-year experiment was a road Which? should never have gone down in the first place. Back in September 2009, I remember Which? chief executive Peter Vicary-Smith saying he wanted to “extend the organisation’s brand”, and offer financial products to both its million-plus members and the public in general.

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

At the time, Vicary-Smith’s vision marked a radical departure for Which?. It included the possibility of capital-raising for acquisitions and even striking joint ventures with commercial partners.

In the end, though, the businesses it gave birth to were more prosaic in their approach.

The problem for both of them, certainly the mortgage one, was that they were hamstrung. On the one hand, they needed to make money, clearly. On the other, they had to reflect some of the ethical values of the consumer organisation whose name they were “borrowing” to market themselves to their prospective clients.

At the time, I was critical of the move. One of the difficulties its advisers would face was that the mortgage market is, by its nature, a challenging beast to ride, and home loans are not always what they seem at first sight.

These are products with a long tail. They are closely linked to one of the most powerful aspirational needs of human beings – that of providing a shelter for yourself and your family.

My concern was over the potential reputational damage to Which? of giving the wrong advice or, more likely, of giving good advice which nonetheless led to negative consequences for consumers because of events that could not have been foreseen several years before.

And as someone who used to write for Which? Money back in the day, I feared there could be a conflict of interest between a publication which had built a reputation for fearless pro-consumer advice, and the grubbier needs of a commercial organisation whose entire existence was predicated on the good name of its parent – a name that had taken more than 50 years to build up back in 2009.

Given the plethora of good-quality mortgage brokers in the market at the time and now, it was hard to avoid the conclusion that the whole point of Vicary-Smith’s grand ambition was not so much to improve consumer choice but to monetise its 1.1 million-strong customer base, many of whom were affluent, middle-aged people with significant disposable incomes.

To be fair, I think Which? Money magazine coped admirably with the parent company’s move into financial services.

There was never a hint that the editorial line was in any way affected or influenced by the commercial interests of Which? Financial Services.

The difficulty was that the separation between the two entities – the campaigning pro-consumer stance and the straightforward commercial business – was never straightforward. For example, Which? Mortgages was charging a fee of up to £499 for its service. Granted, it was a Rolls-Royce level of service, with a lot of hand-holding involved. At the same time, however, it also received a commission from lenders on completion.

Who could say whether the advice was any less biased than, say, John Charcol or L&C Mortgages, both firms with an equally good reputation among borrowers?

In the end, I suspect that commercial realities are what did it for Which? Mortgages and its insurance arm.

Vicary-Smith, meanwhile, left Which? in October 2018, after trousering an annual salary and other remunerations of £500,000 for the 2017/18 financial year, including a £166,000 “bonus”.

According to Third Sector, a magazine covering the voluntary and not-for-profit sector, there was also a further payout of £331,000, most of which was pay in lieu of notice, because Vicary-Smith agreed an earlier departure date to allow an orderly handover to the organisation’s new chief executive.

As part of the deal, some of this extra dosh continues to be paid in the current financial year. Nice work if you can get it.

I’m sure the scores of financial services staff who lose their jobs at Which? won’t begrudge him a penny of it.

Nic Cicutti can be contacted at


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. My concern was over the potential reputational damage to Which? of giving the wrong advice or, more likely, of giving good advice which nonetheless led to negative consequences for consumers because of events that could not have been foreseen several years before.

  2. Thomas Frodsham 11th June 2019 at 6:05 pm

    You reap what you sow. The best advice is from the smallest brokers.the best businesses are the smallest. It is difficult for larger enterprises to compete, The sooner everyone grasps that the better.

  3. Julian Stevens 12th June 2019 at 9:39 am

    I’ve never followed Which? magazine’s activities other than in passing, though I recall that its past championing of mortgage-related endowments came badly unstuck, largely as a result of the FSA having adopted a hatchets and sledgehammers approach by forcing providers to produce mid-term projections on a basis that made virtually all of them look absolutely dreadful. That, in turn, led to a lot of policyholders panicking and doing the worst possible thing, namely surrendering them instead of partially switching part of their mortgage to a repayment basis so as to cover any potential shortfall.

    Some properly considered forward thinking (sadly, not one of the FSA’s strongest points) could have avoided that tsunami of largely needless and wasteful surrenders, not to mention the damage it did to public confidence in the financial services sector.

    The very last mortgage-related endowment that my firm sold matured in 2016 at 27% in excess of target, so they’re by no means all bad, even though they’re (obviously) not suitable for everyone.

  4. An arrangement fee,procurement fee and a completion fee! they deserved exactly what happened to them. It’s ok to shout a good game from the touchline but playing it is a different matter!

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