Julian Knight: Consumers have had a narrow escape from smart-meter sales putsch
Sunday 08 April 2012
Yet another energy mis-selling scandal has, I hope, been averted. Providers were gearing up to use the installation of 50-million- plus smart meters in British homes over the next decade to sell their wares and sign people up to their tariffs.
Given the track record of the industry for pushy marketing, confusing terms and conditions, and for signing people up without permission, it was a consumer disaster waiting to happen. Which? – amongst others – spotted this, and I called on the industry last year to sign up to a "don't sell, just install" code of conduct. Now, finally, the pressure has told, and the Government has made it clear to the industry that it won't be able to capitalise on the potential bonanza of getting one of its sales people into every British home. This newspaper revealed, for instance, that the country's biggest provider, British Gas, was busy recruiting installers with the promise of bumper sales commissions.
If we needed any further evidence of what can happen when the energy firms get their foot in your door – literally – just look at the decision last week by Ofgem to add provider E.on to its major investigation into doorstep energy mis-selling. E.on claims the inquiry is unnecessary, yet complaints from consumers still roll in. The consumer has dodged a bullet here.
Clear out the advisers' stable
More bleating has been heard from the financial-advice industry over the implementation of the Financial Services Authority's Retail Distribution Review. In English, the RDR means the banning of commission sales and the forcing of advisers to sit proper exams before they are let loose on people's life savings.
Ken Davy, head of SimplyBiz, a compliance and business-support firm, says the FSA has acted in a "fundamentally flawed" way by "blindly" carrying on with RDR implementation. Mr Davy's view is that the financial world has changed markedly since RDR was dreamt up, and, anyway, failure rates among financial advisers are lower than, say, solicitors. I always find it interesting that some financial advisers like to bracket themselves with professionals such as solicitors – particularly when it comes to fees – yet have resisted moves to regulate what they do properly along the lines of the said professional classes.
I'm sure the overwhelming majority of financial advisers are competent, diligent and well qualified to give advice, but in 13 years of writing about all things money I have met quite a few who have been, frankly, crooked, or only interested in their commission. They usually go out of business when regulators catch up with them, but they wreck lives in the process.
Rather than being a sledgehammer to crack a nut, RDR is vital and I just wished they'd got on with it much sooner. As for Mr Davy reckoning that one in five advisers is leaving the industry because of the extra controls of RDR, then, as far as I'm concerned, that's good. It was a necessary clear out of the Augean stables.
ISAs: Why wait til the 11th hour?
I never quite get the last-minute dash to beat the Individual Savings Account deadline. In a rather gimmicky move, Halifax announced it was keeping its branches open late – poor staff – to take in fresh ISA money before the 5 April deadline. Of course, if you can afford to, you should use your ISA allowance to the max, particularly when it comes to cash savings, as you are sheltering your interest from tax. But why do so many people wait to the last minute, why not do it at the start of the tax year, and then you benefit from the shelter given to your money via an ISA for a whole year longer?
Of course some people who wait are behaving with a degree of logic as many of the best deals aren't announced until late in the year, but some providers do let you transfer. What's more, although the best deals may not occur until February and March, the difference in rates is pretty marginal, in fact you may find you lose more by keeping your money outside an ISA and thereby liable to tax at your marginal rate than you gain by waiting for 11 and half months to find a product which earns you an extra 0.1 or 0.2 per cent.
It seems that the Post Office and Nationwide think similarly, as they have both launched ISAs aimed at people opening an ISA at the start, rather than at the end, of the tax year.
New policies on gender
This year, 21 December should be in your diary, and not because it's the shortest day of the year. No, from that date European laws on age discrimination will apply to insurance quotes, and insurers will no longer be able to take gender into account when pricing policies.
At a stroke, women will pay more for car and life cover, while men will pay less but, crucially, get a lower annuity income. Pricing shifts could be substantial, in some cases up to 20 per cent, but few people are making plans.
Now, with annual policies such as motor you're best just taking your chances, but with longer-term arrangements – life and annuities – this could be a good time to secure your deal; over the next few months I expect insurers to start equalising quotes as the 21 December deadline approaches.
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