Tuesday, 30 August 2011

Boiler rooms continue to cost the older consumer

The Times reported last week that “a new generation of ‘boiler rooms is cropping up overseas, stretching the ability of law enforcement agencies to stop them ripping off British Investors”.(1)

The term ‘boiler room’, is used to describe frauds in which sales people are hired to call unsuspecting individuals and push investment opportunities. These high-pressure calls are often used to sell worthless or nonexistent securities. These operations typically consist only of a large number of telephones in a single room, giving rise to their name.(2)

Boiler rooms represent a huge cost to the UK consumer. The FSA estimate that they cost the UK consumer £200 million a year.(3) And much of that cost falls on the older consumer. Six in ten of those exposed boiler rooms are aged over 45 and one in three (35%) over 65.(4)

Of course, not all older people are vulnerable consumers – and many are in fact more confident and experienced consumers. But as we get older, we are more likely to find ourselves vulnerable to scams, mis-selling and other consumer crimes. Research dating back to the 1970s suggests that older people may be ‘more easily persuaded and deceived, be less aware of unfair business practices, and have reduced information processing capabilities. (5) As a result, the research suggests this group more likely than other ages to find themselves vulnerable to consumer crime.

Recent years have seen a welcome increased interest from Government and police authorities on the issue of fraud. In 2005, and following a Manifesto commitment, the previous Government commissioned an interdepartmental review into the detection, investigation and prosecution of fraud. A review team comprising representatives from across the criminal justice system began work in October 2005 and the Fraud review was published in 2006.

Amongst other proposals in the review, the Government committed to setting up a National Fraud Strategic Authority to devise a national strategy for dealing with fraud and ensure that it is implemented. The review also proposed a new National Fraud Reporting Centre to tackle the problem of under-reporting and help enforcement officers identify trends and provide information to support investigations.

The National Fraud Strategic Authority (Now National Fraud Authority) was established in October 2008. And the Government has subsequently set up Action Fraud, as a single national place for individuals to report scams and frauds.

Since then, the FSA has worked with enforcement authorities to undertake a number of high profile enforcement actions. Six men and a woman were arrested, for example, in May 2009 for running illegal ‘boiler room’ share selling operations. The Financial Services Authority (FSA) said victims of the alleged fraud appeared to have lost £28m (6).

But whilst fraud has attracted much more attention in recent years, the perpetrators still seem to be ahead of the authorities. And despite the good progress over the past five years, there is much more that Government can do to tackle this challenge.

Alongside more research, more could be done to support victims of these crimes, who find there is very little (if anything) they can do about the losses they have suffered.

The multitude of bodies (OFT, FSA, NFA, SFO etc) tasked with working on this issue could still work better together. Alison McHaffie of Cameron McKenna is quoted in the Times as saying “Questions remain as to whether the present hotchpotch of overlapping jurisdictions is the best way to ensure these crooks are brought to justice”.(1)

There is also a need for greater interventions at an international level. There is a significant role for foreign governments (e.g. in Spain and Canada) in terms of tackling these crimes. In some countries little enforcement action happens because the perception of national agencies is that the victims are based in Britain, and the perpetrators, whilst based in their country, are also British. The responsibility then falls back onto British authorities who often have limited jurisdiction and powers.

Whilst some international cooperation exists, much more should be done to ensure criminals cannot exploit the lack of international cooperation to undertake fraudulent activities.

David Sinclair

(First published at www.ilcuk.org.uk)

1) Forget Costa Del Crime, boiler room fraudsters have eyes on rest of the world. The Times, Thursday 25th August
2) http://www.investorwords.com/517/boiler_room.html
3) http://uk.reuters.com/article/2011/08/22/uk-britain-financial-crime-idUKTRE77L4F220110822
4) http://www.fsa.gov.uk/pages/Library/Communication/PR/2009/055.shtml
5) Rosemary P. Ramsey, R; Marshall, G; Johnston, M; Deeter-Schmelz, D Ethical Ideologies and Older Consumer Perceptions of Unethical Sales Tactics Journal of Business Ethics (2007) 70:191–207
6) http://news.bbc.co.uk/1/hi/business/8035830.stm

Sunday, 28 August 2011

Meatballs at Quality Chop House

When @georgedsinclair gets an idea into his head, he can be hard to persuade that it's a bad one. So from the moment two ladies stopped us on the corner of Exmouth Market, mentioning a new meatball restaurant, I knew we wouldn't be able to go elsewhere.

I like Exmouth Market. It's a nice area with some great restaurants and a nice vibe. It's also a shared space (road traffic and pedestrians the space). In effect it means that road traffic travels as slowly as pedestrians. It's also a relatively undiscovered bit of central London, not being particularly close to a tube line. (wiki link)

But I digress. We spent the weekend in the Holiday Inn on Kings Cross Road so it was just a stroll to Exmouth Market for tea on Saturday. And from the moment meatballs were mentioned I knew that would be where we were heading. 'I want meatballs', 'can we have meatballs?', 'Is this the meatballs restaurant?'....

I had mentioned to @shellsinclair the quality chop house on Farringdon Road but I couldn't see @georgedsinclair going for it. And I knew it was quite expensive. But we popped around the corner to look at the menu anyway, only to discover that the chop house was now the meatball restaurant (link).

So, bowing to the inevitable, we popped in. It was a good choice.

I had courgette meatballs in a curry sauce and @shellsinclair went for meatballs in a French Onion soup. Mr @georgedsinclair went for pork meatballs, partly because we thought these might be closest to the Ikea ones he loves (they weren't really). As sides we had some honey roasted carrots, Iceberg wedges with blue cheese and mash. It was all very very good, as well as being good value for money.

The place was child friendly and the staff had the good sense to ask if George wanted the sauce. He probably wouldn't have eaten them with if they hadn't.

For pudding I had a brownie ice cream sandwich. Again, very tasty. And george and I treated ourselves to milkshakes (strawberry and peanut butter respectively).

Meatballs at Quality Chop House is very good and I would certainly recommend. We went on the second day. The staff had too little to do which led to a slightly chaotic service. There was an eagerness to remove plates (done on two occasions before we had cleared them). They forgot the iceberg, and over the course we were served by pretty much every member of staff. But these issues will be sorted over time.

The meatballs were great. You must go.

Location:Rommany Rd,Lambeth,United Kingdom

Thursday, 25 August 2011

The economic cost of an ageing society

The economic cost of an ageing society is increasingly subject to debate. We know that the proportion of public expenditure committed to age-related spending will grow substantially in coming decades. And a declining old age dependency ratio is also likely to have significant economic effects.

The recently published, Office of Budget Responsibility ‘Fiscal Sustainability Report’ (1) argued that “Population ageing will put upward pressure on public spending”. They said that public spending aside from debt interest would increase by 5.4 per cent of GDP or £80 billion in today’s terms by 2061.

The OBR anticipated:
* Health spending rises from 7.4 per cent of GDP in 2015-16 to 9.8 per cent of GDP in 2060-61
* State pension costs increase from 5.5 per cent of GDP to 7.9 per cent of GDP as the population structure ages and State Second Pension entitlements mature. and
* Social care costs rise from 1.2 per cent of GDP in 2015-16 to 2 per cent of GDP in 2060-61. (2)

Moreover, these projections may be conservative: GDP growth could be slower than anticipated, but individual entitlements to certain aspects of age-related spending will be impossible to retrench. Health and care spending could increase further if longevity simply means we spend longer in ill-health towards the end of our lives – notwithstanding the significant uncertainty that surrounds the long term care funding system at present.

This week we saw further debate on the economic impact of an ageing society, but this time in terms of the future of investment returns. With a growing older population, we are likely to have more people decumulating their assets. In other words, a large cohort of retirees means that there will be more people selling their investments than there will be people re-investing through long term saving.

New research (2), by Zheng Liu and Mark Spiegel, published this week in the United States has explored this issue. The researchers explored data going back to 1954 to understand if there was a link therefore between age distribution and the performance of the stock market. They found there was.

They predicted that “the actual P/E ratio should decline from about 15 in 2010 to about 8.3 in 2025”. In effect they predicted a bear market up until 2021. Their good news, which seems little to get excited about, is that in 2030 (after the baby boomers have died!) the real value of equities will be about 20% higher than in 2010.

This research clearly adds another dimension to the economic impact of an ageing society. If it turns out to be an accurate prediction, very worrying times are ahead.

David Sinclair and Craig Berry

(Published initially at www.ilcuk.org.uk)

1) http://budgetresponsibility.independent.gov.uk/wordpress/docs/FSR2011.pdf
2) The OBR also pointed out that “These increases are partially offset by a fall in gross public service pension payments from 2 per cent of GDP in 2015-16 to 1.4 per cent in 2060-61”
3) http://www.frbsf.org/publications/economics/letter/2011/el2011-26.html

Tuesday, 23 August 2011

Lansley asks the wrong questions on health apps

Health Secretary Andrew Lansley MP yesterday issued a call for health professionals and mobile phone ‘app’ designers to suggest new software which could help people improve their health. Apps could deliver improved monitoring of health or help nudge or support people towards healthy lifestyles.

If I had a pound for every time in the past two years someone had suggested to me that there should be a health app for X, well, I’d be at least £20 better off. But you get my point. There are thousands of ideas out there already, many of which are already on the market. This time last year there were over 250,000 health apps on the itunes store alone. (1)

The Times (2) reports that one of the apps likely to be considered would be a FluPhone, which would track epidemics by asking patients to record their symptoms. This might be a useful piece of software, but in the UK we have near real time reporting of flu immunisation anyway. And on a global level, services such as Google flu (3) have been monitoring flu levels for years. Government is often far slower than the market is.

Lansley claims that his desire is to “give people better access to information that will put them in control of their health and help make informed choices about their healthcare” (4). There is a strong case for Government to promote the best apps out there and doing so could help improve usage. But there is a weaker case for Government to be attempting to come up with ideas for new apps, particularly as the DH have confirmed that they have no money to develop them “We will not be announcing any funding for the development of the best health apps”, said a spokesperson.(5)

Fundamentally however, Lansley is missing the point. Whilst some apps could be better promoted, there is no shortage of ideas.

There are however lots of barriers in the way of the health service increasing its usage of smartphone apps. Digital Exclusion is one of them. If older people, the main users of health services, continue to be less likely than other ages to go online (through a computer or a smartphone) then the benefits of health apps may not reach their potential.

Another major challenge is that we still have far too limited a private purchase culture for health products. Most smartphone apps are purchased by individuals. Yet as ILC-UK research last year showed, we still know too little about how to reach and sell to the older consumer. (6)

But one of the biggest barriers to usage by the health services is the procurement model. ILC-UK did some work last year for a software company who wanted to sell in to the NHS. Their software targeted people with a specific condition and there were perhaps 10,000 potential recipients. But when they explored the market and discovered the cost and complexity of selling into the NHS, they found that they simply couldn’t get their product to market.

So, yes, Mr Lansley should be promoting the best health apps out there. But he must also address the other barriers to smartphone usage for health including digital exclusion, the need for more understanding of how to reach the older consumer, and the sometimes complicated and expensive process for selling into the NHS.

David Sinclair

(This post was also published at www.ilcuk.org.uk)

1) http://culturalsweat.com/2010/08/how-many-health-fitness-apps-are-in-the-itunes-store/
2) NHS should be more switched on about apps, says Lansley. The Times, 22 August 2011 (£)
3) http://www.google.org/flutrends/
4) http://www.guardian.co.uk/government-computing-network/2011/aug/22/andrew-lansley-healthcare-apps-dh
5) http://www.guardian.co.uk/government-computing-network/2011/aug/22/andrew-lansley-healthcare-apps-dh
6) Sinclair (2010) The Golden Economy – The Consumer Marketplace in an Ageing Society http://www.ilcuk.org.uk/record.jsp?type=publication&ID=80

Tuesday, 2 August 2011

Finally got round to putting my BSG presentation online.

This presentation asks whether the Web can save social care.

It argues that:

*We have more older people and are going to need more care

*Care is in crisis today. It is likely to get worse before it gets better

*Technology has a role to play

*But we have assumed the place of technology without addressing the barriers

*There are some challenges to overcome