Awards and citations:

1997: Le Prix du Champagne Lanson Noble Cuvée Award for investigations into Champagne for the Millennium investment scams

2001: Le Prix Champagne Lanson Ivory Award for

2011: Vindic d'Or MMXI – 'Meilleur blog anti-1855'

2011: Robert M. Parker, Jnr: ‘This blogger...’:

2012: Born Digital Wine Awards: No Pay No Jay – best investigative wine story

2012: International Wine Challenge – Personality of the Year Award

Saturday, 1 December 2012

Wine Investment Association (WIA) must be in line with FSA on banning cold calling

Logo of the Wine Investment Association 

The Financial Services Authority (FSA) has very clear rules regarding cold calling and the selling of investments: they ban cold calling. They certainly ban cold calling to strangers. They do, however, permit cold calling to existing customers if certain rules are met. (See details of the FSA's One-minute guide – Cold Calling below) 

Unfortunately the WIA is not banning cold calling to strangers citing the guidelines and standards of the Direct Marketing Association and the Direct Selling Association. The WIA proclaims that its members sell wine as an investment and have set out to provide standards to protect the investor. As they are selling an investment, it is the FSA rules that count.  

If the WIA is to be taken seriously as providing credible and robust protection for investors, then they will have to adopt the FSA rules and guidelines on cold calling. It cannot be out of step with the FSA. 

The WIA should have no need of a consultation period to see that claiming the right to pester strangers with cold calls promoting wine investment is a non-starter.  

Cold calling can expose consumers to high-pressure sales tactics which mean they can end up with an inappropriate or over-expensive product or service.
Our investment and mortgage financial promotion rules therefore ban cold calling (which is called unsolicited real-time promotions in our Handbook and legislation) unless certain conditions are met.

How do we define cold calling?
Cold calling is where a financial promotion is made during any dealings with a customer, which the customer did not begin.

However customers can be approached if they expressly request it. Failing to tick a box to say that they do not want to be contacted, or relying on standard terms that you may contact them again is not sufficient to allow you to cold call a customer.

What are the specific rules for investment business?
Investment rules allow for three scenarios where cold calls could be made:

the promotion is to an existing customer who anticipates receiving a cold call; (my bold)

the promotion relates to packaged products that do not contain higher volatility funds, or to life policies not connected to higher volatility funds; or

the promotion only relates to readily realisable securities (but not warrants) or generally marketable non-geared packaged products.

Apart from the type of product being promoted, we also have rules about how the call must be conducted. Regardless of whether a call is a ‘cold call’ or expected by the customer, the caller must:

only make contact at an appropriate time of day;
identify themselves and the firm they represent at the start and make clear why they are calling;
ask whether the client would like to continue or terminate the call, ending the call if asked to do so; and
give a contact point to any client who they arrange an appointment with.

What are the specific rules for mortgage business?
A firm cannot make a cold call unless it is to an existing customer who anticipates receiving a cold call, unless the information is limited to only the name of the firm, a contact point and/or a brief factual statement of the firm’s main business.'

Hugo Rose MW: chairman of WIA

I sense that the founders of the WIA have not fully thought through the implications of launching an investment association as well as calling for transparency and good practice. Yesterday I asked Hugo Rose MW, chairman of the WIA, whether Culver Street (Trading) used cold calling. His reponse: 

'My Friday afternoon position is that the Code does not require Members to declare publicly commercially sensitive matters of this sort.'

Although I can understand that Rose might well feel that knowledge of uninvited cold calls might not be commercially advantegeous, he ought to have been aware that this is just the sort of question he and other founder members of the WIA would be quite properly asked.   



See Robert Joseph's thoughts on the WIA and regulation here and here.

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