Should reviews and ratings be regulated?

One of my biggest bugbears since I launched Fairer Finance has been seeing the number of bogus endorsements and accolades that seem to litter every industry. What's clear is that in a world of infinite choice, consumers are desperate for some help and guidance in making the right decision. But this has opened the door to thousands of new awards and accolades that aim to provide a mark of quality for brands, often regardless of whether such a mark is really merited.

The market broadly breaks up into two different camps - consumer-based reviews, and expert reviews. With the former, the problems lie in providing reassurance that the customers who leave reviews are genuine. If you're a site like Tripadvisor, harnessing reviews on thousands of hotels world-wide, it's all but impossible to ensure that every review is from a real customer. But the hope is generally that with a large enough volume of reviews, any biases will be evened out. Savvy consumers have rightly become very wary of a hotel that gets amazing reviews from a tiny number of customers.

Can you trust the experts?

The other type of reviews are the expert ones. These include everything from Which? style lab testing through to industry awards - and of course the kind of reviews that we do at Fairer Finance.

The tough reality is that it's all but impossible to review in such a way that is 100% accurate. But the important thing is that reviews are as robust as possible, and not manipulated for the commercial gain of the reviewer or awards company.

Just about every large company receives awards of one sort or another these days - and all too often they're not really merited. Instead, the award company has stacked the deck to ensure that those with the deepest pockets are awarded the prizes.

An important intervention

I can't tell you how happy I was to see the CMA announce plans to look into this issue. It's important because endorsements are becoming increasingly influential in swaying consumers' behaviour. Maybe it's not so important if you make the wrong decision when it comes to buying a kettle or toaster. But when you're dealing with a financial product, for example, the stakes can be much higher. Making the wrong decision could mean buying an insurance product that doesn't pay out - costing you hundreds or even thousands of pounds.

I'm not holding my breath for any kind of radical policy proposals from the CMA. This is not an easy problem to tackle. There are too many sites using reviews to take a heavy handed approach. One possible solution, however, might be to put the onus on companies to ensure that the research techniques behind any accolades they use in their marketing are robust. As I've written before on this blog, awards like the British Travel Awards - where the Post Office has won Best Travel Insurance provider eight years in a row - simply don't stand up to scrutiny.

Likewise, MBNA won best customer service at the Moneyfacts awards. But there's not enough checks and balances in the voting to prevent abuse. In my experience of carrying out robust and independent customer polls over the past six years, MBNA has always been towards the bottom - if not at the very bottom - compared to its peers.

It's great news that the CMA is providing some thinking around this important issue. And we'll be one of the first to feed into its consultation.