Protect us from charityPosted on: 21 March 2016 by Steve Wanless
Steve Wanless looks at how some charities have a hidden agenda when offering a helping hand
Trust is the key to any relationship, whether family, friend or financial. Betrayal of trust is bad at any time, and especially if it hits you hard in the pocket as well as in the heart.
In many ways, mixing business with pleasure is never a good idea if it can be avoided. Buying (or selling) a second-hand car from a neighbour may appear a good deal – until something goes wrong with it.
There’s always plenty of seemingly great financial advice over a pint or a bottle of wine down at the local pub; yet it makes sense to seek expert knowledge when your hard-earned cash and future is at stake.
Many in the UK have been willing to offer a helping hand, whether individually or as part of one of those charitable organisations whose good work we have admired and respected over the years.
Sadly, it now seems as if some of those charities have a dark, even bad side and cannot be trusted with the helping hand that is offered to the elderly, the hard-up and others in need.
Selling your details
Charities enjoy a special tax status – and there are over 160,000 in this country. Many of them do good work, but others in their effort to run their organisations as businesses, have lost sight of their good intentions.
Last year charities were blamed for the hounding of Olive Cooke, 92, that led to her suicide; her body was found near the Clifton Suspension Bridge in Bristol.
Olive, who was Britain’s longest-serving poppy seller, had crumbled under a barrage of cold calls and letters from charities for donations after her details had been sold by more than 20 professional database companies.
A report by the Fundraising Standards Board (FRSB) stated: “Seventy charities reported that Mrs Cooke’s details were secured via a third party. Of those, 29 sourced her details from a list procured from a fellow charity, 26 from a list broker and 14 by exchanging data with fellow charities.”
The outcry at Mrs Cooke’s treatment was enough to force the government to commission a report into UK fundraising by Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations.
That report recommended that the self-regulatory FRSB should be replaced with a new independent watchdog.
Charities as a business
It has got worse. The full extent of some charities commercial activities was recently revealed when “The Sun” reported that “Age UK” was receiving £6 million a year from energy giant E.ON to recommend one of its tariffs, which led to many customers paying more than necessary.
Sadly this is only the tip of the iceberg as far as Age UK – this country’s biggest OAP charity – business deals go. A total of £47m was made last year from the business of recommending insurance (car, travel and home), funeral plans, equity release and even lottery tickets.
It’s big business – but should it be the business of a charity. Your Independent Financial Adviser (IFA) provides a service, recommending the best product or investment for your situation and future.
Most pensioners would trust that the advice provided by Age UK would be motivated by what was best for them – and not the charity’s bottom line – so the best deals would be the ones offered.
Over 152,000 signed up for E.ON tariff recommended by Age UK – at an average cost of £1,049 annually – that almost £160m! At £6m, Age UK’s “cut” was less than 4%.
It has transpired that deal was, again on average, £245 more expensive than E.ON’s cheapest 2015 tariff! Do the maths – a staggering £37m was paid more than necessary by many struggling to keep warm in winter.
The financial industry was brought to heel over recommending products that earned them commission many years ago. What the “salesman” earns today is part of the documentation that the customer receives; such financial transparency makes for better service and a better working relationship.
Few would have had a clue that charities were on the “take” to such an extent – and most will be shocked to learn they are promoting products with a vested interest.
Are pensioners being misled?
“People expect a fair deal when it comes to energy bills, not a rough deal,” insisted Energy Secretary Amber Rudd, who has ordered the watchdog Ofgem to investigate “I take very seriously this allegation that Britain’s pensioners are being misled.”
The loss of a couple of hundred quid a year is bad enough for those who can’t afford it, but the revelation that this charity is also recommending mortgage products is especially worrying.
Equity release is not without its critics. It allows the home owner to borrow against the property; the debt is rolled over and paid back from the estate when they die.
At 6% or over, it is not a cheap alternative – especially at a time when a two-year fixed mortgage comes in at under 2%. Borrow £100,000 and in 12 years, that debt will have grown to £200,000 - live another dozen years and it’s £400,000, probably meaning there is little left for the children and grandchildren.
Age UK receives commission of 0.75% of the total amount lent, and a contribution towards marketing support under a deal with Just Retirement, a mortgage broker.
Age UK aren’t the only charity after “big business” – the RSPCA, Oxfam and the British Heart Foundation are others recommending financial products.
It’s high time that such charities take a lesson from the financial sector - as well as declaring when their best interests are not always your own!
The speed at which AgeUK reacted to these headlines by suspending its branded tariff energy deal with E.ON demonstrated the seriousness of this situation and the damage it was doing to this charity and the sector in general.
For a free, no obligation initial chat about your individual finances, call us on 0800 0112825, e-mail firstname.lastname@example.org or take a look at our website www.wwfp.net.
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