James Daley

By James Daley

Almost every time I go to visit the headquarters of a bank or insurance company, there seems to be a bucketful of trophies and awards on display next to the waiting area.

As someone who’s been studying consumer polling, and analysing banks and insurers, for well over a decade, I pride myself in having a fairly good insight into which businesses do well by their customers. And many of the awards that are handed out are well deserved.

But even the companies who have a poor reputation for service seem to manage to pick up awards from somewhere or other – with dozens of prizes being handed to the least likely candidates.

Over the last few years, endorsement schemes have been popping up left, right and centre. And given the lack of trust that most consumers have in banks and insurers, it’s not hard to see their appeal to the companies who buy the logos and put them on their marketing.

Who's going to endorse the endorsers?

When I launched Fairer Finance earlier this year, I wanted to introduce a real mark of quality into the sector, and we’ve been careful to be as transparent and fair in the way that we award our ratings, so that we can earn the trust of the public, and can also persuade the industry that our awards are the ones worth winning.

But the transparency and ethics of many of the award and endorsement schemes is poor – and it’s arguably damaging both for the industry and its customers.

On the tube last week, I noticed an advert for the Post Office, claiming that it had been awarded “Best Travel Insurance Provider” by the British Travel Awards for the eighth year in a row.

Although I know the Post Office is relatively well regarded in the travel insurance sector, I’ve never seen it top a customer poll. In our tables, it is slightly above average for customer happiness and trust, but well below brands such as LV and Amex.

When I registered myself to vote for the British Travel Awards, it wasn’t difficult to see why the Post Office does so well. Only seven brands – of which the Post Office was one – were listed in the Best Travel Insurance Provider category. Although there was a box to type in the name of other brands that did not appear in the list of 7, travel insurance is one of dozens of award categories, and as most people fill in the questionnaire so that they can get entered into the free prize draw, it’s likely that the companies who are highlighted get the highest number of votes.

Another problem is that the opinion of the people who are voting is not necessarily of any interest. The majority of them are probably not - and have never been - customers of the companies they are voting for.

Finally, once companies are on the shortlist, they’re encouraged to do whatever they can to get their customers to vote in the awards. So the results can be heavily swayed by those companies that are most effective at mobilising their happiest customers to vote for them. There’s no scrutiny around where voters come from.

Cash for gongs

It’s a similar story amongst most other awards. There’s often very little transparency around how shortlists are drawn up – and there are plenty of awards handed out that simply don’t look convincing to those of us who have been looking at truly independent polling data for a number of years.

At Fairer Finance, we use a nationally representative sample of 10,000 consumers to calculate our customer happiness and trust ratings – and we only poll people who are actually customers of the companies they’re rating. Our methodology isn’t perfect, but we acknowledge its shortcomings, and most companies agree with us that it’s fair.

There’s a serious issue for regulators to consider here. If customers are making their purchasing decisions based on third party endorsements, surely there should be some scrutiny of this industry.

Big money changes hands for these awards and the ceremonies that come with them. So there will always be an incentive for award companies to find ways of handing out more accolades to more companies. There’s no real counter to this – no incentive driving award givers to be transparent and fair in how they hand out their prizes.

Awards and endorsements should be hard won, and only handed out to companies who are genuinely ahead of the pack.