Reward cards, free personal emails, free wills signed off by a solicitor – they are all free services gathering data for future cross-selling opportunities that would never make a penny on their own terms.
It’s patronising to suggest that the innocent public doesn’t realise what’s happening. People do. They just don’t care.
I listened to a radio interview last week with someone from energy regulator Ofgem, bemoaning the fact that they had made energy pricing more transparent than ever, and yet relatively few people bothered switching to a cheaper supplier.
The lever it pulled to create a more even and, in theory, more effective and efficient market was transparency. Rather like the FCA has with funds. The mistake the regulator made was thinking anyone cared.
We’ve seen plenty of this already in financial services. The big money is in asset management, not advice, and this is reflected in the accounts of the large, vertically integrated distribution businesses in the UK.
Big losses on their advisory arms, which are more than offset by huge gains in their investment divisions, suggest advice is just another cross-selling opportunity.
Given the general consumer trend towards free or subsidised services in return for the ability to cross-sell, should we be surprised if it proves attractive and will anyone care?
Phil Young is managing director of Threesixty Services
