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Thursday, March 11

Google and The FSA @ 11:50 AM

Your columnist feels foolhardy enough using this space to regularly point out the shortcomings of the FSA, but when it comes to challenging Google in the same way, any internet marketer best tread very carefully. Lord knows what Google can do to an SEO or PPC marketing campaign if they decide you need to be punished for pointing out flaws in their methodology!

Let’s hope they are benevolent gods. For there is no doubt that seeking to regulate a financial services market without regulating the online outcomes is becoming a less viable approach with every passing day. Already the vast majority of consumers who set out to learn about any particular aspect of financial services will type the words they think most relevant into their Google search bar. And for most all that means they will get to meet whatever site Google thinks most suits those words. Now if that turns out to be sellers who provide a very different solution from anything that might constitute good advice, then the FSA’s very expensive efforts at educating consumers are being dwarfed, thwarted and thrashed by the world’s most powerful marketing tool.

Let me give you an example or two. If you type in “life insurance” not one prominent player on that search term on page 1 offers advice as their primary solution. But the FSA are clear that non advice, while acceptable, is not the process likely to yield the best results for those consumers not sure of what they want. Try “critical illness”, which arguably only the truly expert should buy without the protection of the Ombudsman, and again non-advice dominates entirely. And it has no requirement to encourage, let alone ensure suitable buying decisions. Worse, type in “income protection” and you have the fantastic irony of the disgraced PPI market being laid out in front of you, having hijacked the good name of an entirely different product for its own ends. And I’m told that “ISA” and “Pensions” and all other likely words where a normal person might start a financial services journey or investigation will lead most to non-advised non-ombudsman protected solutions.

So the web and non-advice are synonymous, and that may not matter much when you are buying a book, but in financial services the quality of the buying decision is (rightly) seen as being of such importance that protecting it has spawned the vast quango that is the FSA and the huge costs it imposes on all in financial services. And in the end only the consumer can pay that bill. But if consumers mostly all do their learning outwith that cost base and its protection what is the point of having it. It’s regulating and protecting a rapidly shrinking proportion of all buying decisions each day.

And the only reason for that is that Google decide who consumers are most likely to meet the amount they spend and the structure of their site, not in any way the quality of the consumer outcome they cause. You can see the anomaly I trust. In short, the free market is colliding head on with regulation and the free market is winning by a mile. No problem there, but where does that leave a by-passed regulator?

The logic it seems to me is that either the regulator should insist that Google gives priority to advice and the routes proven to best serve the consumer, or the regulator folds its cards and leaves the game. Because the game is online, and online solutions are not regulated as to their suitability or quality of outcome.

Tom Baigrie, LifeSearch
published in Money Marketing, Thursday 11th March 2010 -- 4 comments: View - Post your own comment

Posted by Simon Dunn @ 11:31 PM, March 24

Excellent article Tom. I'm not going to hold my breathe in waiting for an FSA response though, as I'm surely they are far too busy beating the lowly IFA with a stick than to readdress issues such as this. Part of the problem, as I see it, is that for the main part clients see life cover as extremely simple cover and easy to arrange with little or no intervention or advice. Obviously, we know better, but until there is more media coverage or education relating to the pitfalls of taking the wrong cover little will be done to change the situation.

Posted by Brian @ 02:13 PM, March 13

Good article Tom. I agree with Phil - it will be interesting to see what the FSA has to say.

Posted by Phil Castle @ 11:06 AM, March 12

A very good article by Tom Baigrie. Would it not be nice for once to read an FSA response (after all they have a statutory duty to mainitain market confidence) on the posted comments below. Come on Lesley Titcombe, have an opinion and join the debate.....

Posted by Steve @ 12:00 PM, March 11

Many a business has had internal challenges to the may that Google 'make the rules' but few if any stick their head above the parapet to truly open up healthy debate. Nice one!

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