“I’m sorry we can’t comment on individual companies,” the press office spokesperson always says, no matter how hard you try to get them to mention a company by name.
It is therefore not surprising that the regulator has appealed against the Information Commissioner’s ruling that it must name and shame advisers who performed badly in a mystery-shopping exercise.
The FSA claims that it will jeopardise its future use of mystery shopping – an exercise it depends on to assess various areas of the market, including its treating customers fairly initiative. It might even endanger the commercial interests of advisers who are mystery-shopped because may not be truly reflective of their market practices, it protests.
It is not the first time that the FSA has been told to “out” culprits. Last year, the vociferous MPs – headed by John McFall – who form the Treasury select committee were on the case of the financial services industry.
They had a pop at the FSA for failing to police financial advertising. McFall and his gang were concerned that, unlike the Advertising Standards Authority, the regulator does not publicly chastise companies that have broken the rules and were worried that consumers’ interests may not be protected as a result.
There have been a fair few abysmal ads in the past that have promised the earth but failed to deliver and the FSA sat back and allowed providers to get away with blue murder. But the FSA has learned its lessons and a few years ago put pressure on providers. There is no doubt that the face of financial advertising has changed significantly. It has reviewed thousands of promotions, most of which it had amended or even withdrawn.
Fund groups now have to show five individual years of performance, making it harder for groups to get away with using a fluke year to mask dismal performance in others, as they used to be able to do.
I wonder whether naming and shaming makes a difference? Take the ASA, for example. It has investigated just half a dozen or so mainstream providers over the past year (including Barclays, Lloyds TSB, Nationwide Building Society and Churchill) after receiving complaints. Many of those complaints were nothing more than semantics because the came mostly from snitching rivals rather than a full postbag from angry TV viewers.
Indeed, I reckon only a minority were aware that Churchill and its nodding dog were forced to change future TV ads a couple of months back because its “challenge Churchill ads” were found to have breached its code. I doubt that it has affected its business either and herein lies a problem with naming and shaming in many circumstances – the horse has often bolted by the time a provider is reined in.
The naming and shaming of those found to be guilty of mispricing endowments revolves around an informal mortgage endowment review made six years ago. I thought the endowment scandal was behind us. Time bars have seen complaints fall to a trickle, leading the Financial Ombudsman Service to cut 260 jobs. Again, the horse has long since bolted and it would only be a mud-raking exercise if the firms were publicly shamed. Those found guilty know who they are and understand that the regulator has its prying eye on them.
But where naming and shaming should come in is where a bad practice is still ongoing – and could make a difference to the consumer. The misselling of payment protection insurance provides the perfect example.
Despite the OFT investigation, the regulator recently found that many firms were still not giving customers clear information about the product or what it will cost. They were guilty of not telling them the extent to which they are eligible for PPI cover and what they are covered for. Although many firms that failed to satisfy the FSA have since stopped selling PPI, four firms are still under investigation. The public has a right to know who they are.
Paul Farrow is money editor at the Sunday Telegraph