Invisible Brand

For those who prefer business-class travel, luxury hotels, platinum or black credit cards and Michelin-starred restaurants, paying more to get more is a way of life. So why is it, asks Lucian Camp, that so many financial services providers still only offer a one-class service?

I found my friend Mark in a very bad mood when I sat next to him at a dinner the other night. A hot water pipe had burst at home and he’d had to make a claim on his insurance. And although the damage wasn’t serious, the experience of dealing with the insurance company had left him apoplectic.

You really don’t want to know all the details – an interminable but tiresomely routine saga of unanswered calls, lost paperwork, unavailable plumbers, missed appointments, bodged work and unacknowledged complaints. Mark’s internal pipework was running very hot indeed.

“You know your problem,” I told him. “You’ve been treated like an ordinary person, and you hate it. This is the kind of 1- or 2-star service that ordinary people get all the time – whether they’re dealing with the NHS, or a cheap Spanish holiday hotel, or a fast food restaurant, or the DSS, or a standard-class train journey, or the local council, or whatever. It’s just that you’re not used to it. You live in a world of private healthcare, hand-made holidays, business-class travel and luxury restaurants. You don’t understand that this is what life is like for about 95% of the population.”

Of course this made him even crosser – bad enough being messed about by an insurance company, but even worse to be told you’re an out-of-touch elitist. But the episode left me thinking. And what I was thinking about is how difficult it is, in large parts of the financial world, to pay extra in return for a better service.

I have to acknowledge straight away that it’s an inconsistent picture. In some areas – especially money transmission – premium services are readily available. And I must say that to members of the Business Class set like my friend Mark and, of course, me, they’re worth every penny. When it comes to improving the overall quality of my life, I don’t think I spend £1500 a year better than the money I pay to Coutts (the service is so good and so comprehensive that when I too recently suffered from a leaky pipe moment, it never occurred to me to use my insurance company’s helpline - I turned immediately to my Coutts black card concierge service to sort it out for me, which they did with great speed and courtesy).
In some other areas, niche premium services are available but have tiny market shares. In general insurance itself, for example, there’s Hiscox and I think there may also be Chubb. But none of the major brands offers an “upper class” option – where is Direct Line Gold Telephone, or Churchill Havana Cigar Class?

And elsewhere, there simply isn’t a premium option at all. To the best of my knowledge, for example, right across the whole life, pensions and investments market, there isn’t a single provider willing to take more money off me in return for a better service, and the position is much the same in mortgages too.

Of course the waters are somewhat muddied by the dominant role of intermediaries in these markets. You could argue that IFAs in themselves represent a premium offering, available only to the affluent and providing added value advice and financial management in return for commissions or fees.

This is partly true, but a moment’s thought confirms that it’s not the whole story. A travel agent may give a superlative service, but if he only has two-star accommodation available then his clients won’t be satisfied. The waiters in a restaurant may be welcoming and solicitous, but if the food is cheap and nasty then few diners will come back for more.

In fact, failing to provide intermediaries with more than one service standard option is just as odd, and just as unsatisfactory, as failing to do so for the end client. The presence of IFAs in the distribution space adds to the case for premium services, rather than subtracting from it.

What might a premium service look like? Depends on the market, and depends on the pricing strategy. When it comes to air travel, there are people paying ten times the cattle class fare for the full-on business class experience, while at the other extreme these days at Luton Airport you can pay a mere £3 to jump the queue and take the Fast Track security option.

By analogy, I might pay a few pounds extra for my home or motor insurance in return for a Fast Track claim line which is guaranteed to be answered within, say, five rings: or I might pay twice as much (ten times, I think, would be pushing it) for a Gold Standard service that promises not a deterioration, but actually an improvement, in my quality of life if I have to make a claim. I know, for example, that some motor insurers now offer a courtesy car equivalent to your own while yours is in for repairs, not a stupid and embarrassing little Kia Perodua: but how about offering me an Aston?

In pensions and investments, the opportunities to improve service are largely around reporting and communication. For the thirty years I’ve been making contributions (to AXA, since you ask) I’ve been waiting for the quality of my statements to improve: it never has. It’s absolutely dire. And now, as I get a bit closer to the retirement years and become a lot more interested in the whole subject, the opportunities to add value (particularly on the internet) are immense. Actually, I think the base level of service provided to all policyholders is absurdly low, and at the moment thoughts of premium services would be something of a distraction from a bigger and more important task. But the opportunities are there, all the same.

If anyone in any part of the industry except banking and cards would like to have a chat about ways in which they could promise more and ask for more, I’d be very pleased to hear from them – and the whole territory is so utterly unexplored and unexploited that I’m pretty sure I could guarantee to come up with, I don’t know, say a dozen unique and original ideas.

Provided, of course, that you sign up for the super-premium Platinum Idea Generation Service.