Awards let financial services firms boast about being the 'best provider', but our investigation reveals consultancies that 'guarantee' wins and publishers that hand out prizes for cash
Comment: Awards ? good, bad and ugly
The reputation of Britain's banks, insurers and financial advisers is, after the credit crunch, at a rock bottom low. Yet never before have they won so many awards. This year, there will be around 40 different awards schemes, often held in luxury five-star hotels, where amid the beef wellington and claret, companies or individuals can collect gongs in as many as 20 different categories. A company that has the time and effort to enter awards can, in theory, enter hundreds of different categories a year.
But awards are not just there for mutual backslapping. Winning gongs has turned into a ruthlessly commercial business, exploited by magazine publishers that organise the events, and by the marketing departments of financial services companies that want to splash awards on their adverts and promotional materials.
A Guardian Money investigation has found:
? Awards schemes with no formal entry requirements or independent judging;
? Consultancies that take fees from companies to ensure a "guaranteed win" and "take the hassle out" of entering awards;
? Large fees charged by awards organisers to enter awards;
? Awards events where winners are only invited to accept awards if they first pay hundreds of pounds.
For some trade magazine publishers, awards ceremonies have become vital cash cows that keep their publications afloat. Indeed, some monthly publications earn more money from their annual awards bash than they do from the magazine itself, allowing worrying commercial practices to develop.
For example, David Hollingworth of London & Country mortgage brokers recalls declining an invitation to pay several hundred pounds just to enter a marketing award.
A number of organisers charge winners for the right to use their logo on their letterheads. This can cost anywhere between a few hundred and a few thousand pounds, and is sometimes part of a broader winner's package that includes an advertorial article in a special awards supplement.
The UK Pensions Awards, run by Professional Pensions magazine, notifies those attending that they will not be allowed to go up on stage to collect a prize if they haven't paid for a whole table. If a winner is merely a guest at someone else's table, the organisers will announce that they aren't present. Critics say this could put off small firms from entering.
Derek Peck, publishing director of Professional Pensions, says: "With some award schemes, sponsorship tends to underwrite the whole thing, but we are primarily dependent on table sales because we are largely geared towards providers, who can be reluctant to sponsor awards picked up by competitors. Also, in practice we have had people who haven't bought a full table and have been able to collect an award."
Although providers and intermediaries routinely express dismay at such practices, and complain that there are now far too many awards, their own commercial needs tend to dictate that winning awards plays an important part in their marketing strategies. They know awards can significantly enhance their organisation's profile and reputation, and help to instil a feeling of trust. So product providers often highlight them in advertisements, product literature and on websites, and intermediaries usually ensure they figure prominently on their business cards, websites and letter headings.
Specialist consultancies have stepped in to enhance the chances of a company winning an award. Awards Intelligence guarantees to refund clients their fees if it fails to secure them one win from eight category entries or two wins from 12 entries. It boasts that it will increase your chances of winning by 55%.
Entry requirements and judging criteria vary widely across the financial services awards industry. The Money Management Financial Planner Awards asks financial advisers to complete a written exercise of up to 2,500 words anonymously. Those shortlisted by independent judges undergo face-to-face questioning. A couple of other awards involve face-to-face interviews, but many opt for an independent judging panel to consider 500 to 1,000-word entries submitted (not anonymously) by candidates ? who either enter themselves or are nominated by industry-wide vote. The Protection Review Awards 2010 is understood not to have used an independent judging panel or to have had any entry requirements. Shortlists were drawn up by the three organisers who also did the final judging ? but its 2011 shortlists are based on industry-wide nominations.
Kevin Carr, chief executive of the Protection Review, didn't wish to clarify details of the judging process but says: "We are more than confident that our system is fair, unbiased and that the best people win for the right reasons each year."
Penny O'Nions, principal of The Onion Group, an independent financial adviser based in Iver, Buckinghamshire, says: "Awards are a form of advertising that implies to the public that a company or individual has reached a certain standard judged by their peers. But they may have put themselves forward and there's such an array of awards available which are not striving for high standards that it dilutes those which are. People will only ever enter so they can use it for advertising, but if you know you are effective and efficient there is no need to prove it to anyone other than your clients."
Some provider awards are determined by the total number of votes cast by intermediaries but, because voting can be based on fleeting perception rather than knowledge, this can throw up extraordinary results. At the Cover Excellence Awards held in October 2006, Friends Provident (now Friends Life) won "Best Group Life Provider" despite having stopped selling in this market in late 2005. Since then, Cover magazine has made shortlisted providers subject to judging by an independent panel.
Big insurance companies sometimes try to influence results by getting their salesforce to ask financial advisers to vote for them. Similar tactics are in evidence in competitions based on reader votes. For example, a London & Country mortgage brokers blog entry on 20 April invites consumers to vote them on to a shortlist at this year's What Mortgage Awards, and provides a link for voting.
There are no specific rules within the UK Advertising Codes regarding the inclusion of references to awards in financial services advertising, and the Advertising Standards Authority does not judge the validity of a sector-specific award. Neither the government nor regulators currently has any plans to regulate industry awards.
A Treasury spokesperson says: "Normally, regulation in financial services is introduced where, for example, there is a major imbalance between the information available to the person giving the financial service and the consumer."
Critics will argue that such an imbalance exists. Financial services spokespeople contacted by Money agree that those in the industry tend to know which awards carry more weight than others ? but that the consumer doesn't have this knowledge.
Source: http://www.guardian.co.uk/money/2011/may/14/financial-services-winners-industry-awards
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