AGM Minutes 2015

Minutes

of the fifty-eighth Annual General Meeting of

CONSUMERS’ ASSOCIATION

Held on

Wednesday 18 November 2015 at

The Park Plaza Victoria London, 239 Vauxhall Bridge Road, London, SW1V 1EQ

PRESENT: Professor Patrick Barwise (Chairman), Jenny Oscroft (Deputy Chairman), Tony Ward (Deputy Chairman), Mike Clasper (Chairman – Which? Limited), Peter Vicary-Smith (Chief Executive), Andrew Reading (Company Secretary) and some 110 Ordinary Members of the Association.

1/58 MINUTES OF THE 57th ANNUAL GENERAL MEETING OF CONSUMERS’ ASSOCIATION HELD ON 17 NOVEMBER 2014

The Chairman proposed:

THAT subject to correcting the spelling of Mr Nairne’s name in paragraph 2 on page 5 of minute 5/57, the Minutes of the Annual General Meeting held on 17 November 2014 be APPROVED.

The Resolution was duly seconded and CARRIED, 1826 votes in favour, 20 against and 88 abstentions.

2/58 CHAIRMAN’S STATEMENT

The Chairman began by paying tribute to Lord Howe of Aberavon who passed away in October 2015. Lord Howe had been associated with Consumers’ Association since the 1970’s when, as first Consumer Minister, he had been a trailblazer for consumer rights. Lord Howe had been made a vice–president of CA in 1974 and then President from 1992 to 2010. A great debt was owed to his successful efforts to put consumer issues on to the political agenda.

The Chairman said that this was also his last AGM as Chairman which brought to an end his own involvement with CA, having first joined the Council in 1995 for an initial term of six years and then re-joining in 2006. The last ten years had seen Which? on an astonishing growth path based on a combination of continuous improvement in the offer

2

to subscribers and a much wider range of marketing methods. However, that didn’t mean Which? could afford to become complacent, and work was continuing to keep improving the products and extend the mobile offering in order to remain relevant, especially to younger consumers. The aim was to ensure that the core publishing business continued to flourish despite the relentless competition, ever changing technologies and shifts in consumer behaviour.

The success of the core business had allowed investment in new services to increase and diversify long term income. This wasn’t easy as had been found in India where a very good product had been developed, but where it hadn’t been possible to reach consumers on a sufficient scale. The services in the UK – Which? Mortgage Advisers, Which? Trusted Traders and Which? Legal were looking more promising. Importantly, the new services would, like the core business, contribute to the Mission directly by making markets work better for consumers, as well as indirectly by generating funds for non-commercial policy and consumer action work.

Markets were prioritised where it was hard for consumers to find regular suppliers. However, diversifying into new markets was difficult and slow, although every year brought Which? closer to a sustainable future as a bigger organisation with a wider range of income sources.

There had been a big investment in free websites giving consumers the information they needed on general consumer rights at three different life stages – making complex decisions about universities; birth choice and elderly care. This was particularly important at a time when other organisations were suffering deep budget cuts.

The other transformational project was the renovation of the Head Office at 2 Marylebone Road, creating a better working environment that would encourage collaboration.

The Chairman said that he was delighted to be handing over the chairmanship to Tim Gardam who had extensive commercial, policy, media, regulation and institutional experience and was currently Principal of St Anne’s College, Oxford.

Finally, the Chairman said that he would like to record his thanks for the organisation’s current success to the Chief Executive, the Corporate management Group, the Deputy Chairs, Council colleagues, Mike Clasper and the commercial boards together with the loyalty and engagement of the subscriber and supporter base.

3

In closing, the Chairman expressed his thanks to Andrew Reading, who had been Company Secretary since 1991 and who was retiring in 2016 having attended 27 AGMs.

3/58 CHIEF EXECUTIVE’S STATEMENT

The Chief Executive thanked Professor Barwise for the great commitment he had shown as Chairman and said that Which? had benefitted greatly from his insight and experience.

The Chief Executive then spoke about the long commitment to diversifying sources of income and said that Which? Trusted Traders and Which? Mortgage Advisers had started to see real signs of success over the last year. The core business had continued to grow and overall, 2014/15 had been an excellent year with 1.2m members and supporters, 1.5m subscriptions and over £100m in revenue for the first time in the organisation’s history. Record revenues had enabled £12m to be spent on campaigns and free advice.

Listening to what members had to say was central to the way the business was run and formed the core of the publishing strategy. The magazines continued to focus on helping consumers make smarter decisions through an emphasis on relevant, timely articles and value for money content. The online offer had expanded over ten years so that the website was updated continually as results came in, shifting away from testing in batches. The commitment to providing first class relevant content had been key to maintaining the position as the UK’s best-selling monthly magazine in 2015.

The same approach had been taken with Which? Trusted Traders, and there were now more than 4,000 endorsed traders on the books. More was required though and to seek out national opportunities, like the one secured with B&Q’s Homefit installation service.

Which? Mortgage Advisers had built up real presence in the market and an increase of 25% in the number of mortgages arranged had been achieved during the year. The expectation was that the business would move into profit during the first part of 2016.

Which? Legal, a service that had always been profitable, had grown to become a larger part of a portfolio of new services as people sought out legal guidance at an affordable cost. The Which? Wills proposition had been extended and wider opportunities, such as will storage,

4

were being explored. The Chief Executive said he was proud that the new services were successfully meeting a clear consumer need.

Alongside the new services, there had been big investments in policy capability so that the work that underpinned the calls on business leaders and governments was world class. Ways had been found to help consumers help themselves such as advertisements that helped people register for the Telephone Preference Service on their mobile via a text message.

There had been great success on the campaigning front during the year and Which? had influenced no fewer than 24 manifesto commitments across all parties ahead of the General Election. The first super–complaint made to the Competition and Markets Authority(CMA) on supermarket pricing, was backed by over 200,000 supporters. In October, the Government had accepted all of the CMA’s recommendations.

Ahead of the pension reforms announced earlier in the year, the Better Pensions Campaign had been launched to make sure people received the freedom and choice that had been promised, and at the Chancellor’s request, Which? had worked with the Council of Mortgage lenders to standardise and simplify mortgage fees.

It had also been a strong year for the free websites with Which? University and the Consumer Rights sites receiving more than five million visits each in the current year. A survey of the current year’s university applicants showed that 37% of them used Which? University when making UCAS choices. The Which? Birth Choice site, launched in 2014, had also had a strong year. The challenge was to maintain the pace and drive forward the growth that would make Which? more effective for consumers and build trust in the brand.

In conclusion, the Chief Executive thanked members, supporters and staff for their commitment and said that he looked forward with confidence to the next phase of growth.

4/58 REPORT OF THE COUNCIL OF TRUSTEES AND ACCOUNTS FOR THE YEAR ENDING 30 JUNE 2015

The Chairman proposed:

THAT the Annual Report and Accounts for the year ending 30 June 2015 be received.

Mr Marsden referred to the write off of £10m arising from the closure of Right Choice in India and whether that decision could have been

5

taken any earlier. Also if lessons had been learned, why was money still being invested in unprofitable new ventures.

Mr Clasper said that, of course, with the benefit of hindsight different decisions might have been made. However, Right Choice magazine was highly regarded by those consumers who had subscribed, which gave confidence that there was a real need for the product. However, it had proved much more difficult than expected to find profitable routes to market.

A different situation existed in the UK as it was a much easier operating environment and routes to market were known. Also, because of the established Which? brand, there was greater confidence of success. The Which? Legal business had grown and had become more profitable. Which? Mortgage Advisers had turned a corner and was expected to become profitable over the next year. Which? Trusted Traders was at an earlier stage of development and the main focus was on investing to build a mass network of traders.

The Chief Executive said that the core business had performed extremely well over recent years but would be subject to slower growth in the future. Therefore the need to diversify the business and spread risk was important.

Mr Ghosh asked about membership of the Long Term Incentive Plan (LTIP) and noted that there was a provision in the accounts for £1.45m and the accruals charge was £2.2m. Also, who were the external advisers on the LTIP and to what extent was this reviewed by the external auditors.

Mr Clasper said that the business must generate money to fulfil the organisation’s mission. Which? was no longer in a unique position and the growth of the internet had resulted in a much more competitive environment for most of the services that Which? provided. So in order to secure the business over the next twenty years, it was necessary to employ the talented people who could ensure Which? could grow and compete successfully.

Even so, the remuneration paid to senior managers was lower than was paid for similar roles in the external market. Deloitte LLP undertook the benchmarking and the business was valued by Smith and Williamson. While in-year bonuses were paid for short term performance, the question then was about looking after the long term. That was where the LTIP was needed as it looked at the long term performance of the business and paid a reward if that

6

performance was delivered. It also looked at how strong the cash stream was going forward so that all the activities could be funded. Targets were set so that the valuation of future cash would have to grow by a third for the LTIP to pay out at maximum – which was an aggressive target. That had been overachieved as a result of very strong performance and was shown in the accounts as one payment.

Mr Taylor said that all companies at Which? were ultimately owned by the Charity, so all the money paid out as LTIPs could have been used to promote the Mission. If the valuation was based on income, then how much of the increase in income derived from manufacturers via the Best Buy Logo and PriceRunner?

The Chairman said that Council had taken the decision a number of years ago to licence Best Buy logos as, it was no longer possible to prevent companies from claiming they were a Which? Best Buy.

Mr Clasper said that some charities did have LTIPs in place such as The Welcome Trust. As a charity Which? did not receive any donations or government money and all income had to be earned in order to fund websites such as Birth Choice, Higher Education and all the policy and campaigning work. Only a small proportion of income came from the Best Buy Logo and PriceRunner and this did not significantly affect the achievement of the Group.

The Chief Executive added that the pricing of the Best Buy logo was well below what the market would bear and it helped to control how companies used the Which? Brand.

Ms McEvoy congratulated management on expanding product reviews and the income generated. Ms McEvoy said that she had recently retired as Chief Economist at the Office of Manpower Economics where she had advised on pay for 2.5m public sector workers. Ms McEvoy asked whether there could be greater transparency about LTIPs in the Accounts and said it would be helpful if the LTIP accrual for each individual could be shown.

Mr Clasper said that that there had been inconsistency between the way the corporate world accounted for LTIPs and guidance from the Charity Commission. Going forward it might be possible to provide information in a different way and suggested that that the auditors be asked to look at ways of improving transparency.

The Resolution was duly seconded and CARRIED 1716 votes in favour, 153 against and 65 abstentions.

7

5/58 APPOINTMENT, NOMINATION AND RETIREMENT OF MEMBERS OF THE COUNCIL OF TRUSTEES

The Chairman said that there were three vacancies on the Council of Trustees.

Nine valid nominations had been received for the three vacancies namely Tanya Aitken, Shirley Bailey-Wood, Matthew Batstone, Melanie Fuller, Donald Grant, Angela Henry, Haidi Jenkin, Harriet Kimbell and Brian Yates.

In accordance with Article 11.14, the Chairman called for a poll and instructed the Secretary to arrange for the dispatch of ballot papers to all Ordinary members and all Associate Members who had been paid-up for one year. Ballot papers to be returned to the Independent Scrutineers, Electoral Reform Services, by noon on Friday 8 January 2016. The results would be notified as soon as possible thereafter and would be deemed to be the resolution of the AGM*.

The Chairman said that most members would have the choice of voting by post, telephone or internet.

Mr Pittock asked if there would be any appointed Council members throughout the coming year. In reply, the Chairman said that there would be one appointed position remaining following the declaration of the election results in January 2016.

(*The results of the 2015 Council elections are given below)

6/58 RE-APPOINTMENT OF VICE-PRESIDENT

The Chairman said that Christopher Zealley’s five year appointment as a vice-president came to an end at the AGM and that Council had recommended that he be re-appointed for a further term. Mr Zealley had been a Council member from 1974 and, apart from an absence of a year, remained on Council until 2008. Mr Zealley had been Chairman from 1976 to 1982 and was appointed as a vice-president in 2010.

The Chairman proposed that in accordance with Article 13.7, Christopher Zealley be and is hereby re-appointed as a vice-president of the Association.

The Resolution was duly seconded and CARRIED 1731 votes in favour, 80 against and 123 abstentions.

8

7/58 RE-APPOINTMENT OF AUDITORS

The Chairman proposed:

THAT PricewaterhouseCoopers LLP be re-appointed as auditors to hold office until the conclusion of the next general meeting at which accounts are laid before the company.

The Chairman thanked Phil Stokes (Audit partner), for his professional help and advice during the year.

Mr Van Rest asked whether smaller firms had been invited to tender for the Which? audit work.

Mr Castro, Chairman of the Group Audit Committee said that a range of firms, including smaller firms had been invited to tender on the last occasion in 2012. PricewaterhouseCoopers had emerged from that process as the strongest candidate and so had been appointed. The Audit Committee would expect to tender for this work every five years.

Mr Stevens said that Which? should go back to the market on a regular basis and Mr Castro confirmed that this would occur no less than every five years.

Mr Marsden asked what the criteria for judging the best firm of auditors to appoint. Mr Castro said that the brief was prepared in house and PwC had met the brief most closely. Price was not a criterion.

The Resolution was duly seconded and CARRIED, 1686 votes in favour, 158 against and 90 abstentions.

8/58 REMUNERATION OF THE AUDITORS

The Chairman proposed:

THAT the remuneration of the Auditors for the ensuing year be fixed by the Council of Trustees.

Mr Ghosh noted that other services undertaken by the auditors in the current year amounted to £32k and this was a significant increase on the previous year. Also, the fees payable to other services to the Group had increased from £47k to £74k.

Mr Cadranel (Group Finance Director) said that on p27 of the financial statements, there was a paragraph about a new technical alert which

9

had impacted on many charities and that was the primary reason for the increase. It was a one-off situation and would not be repeated.

The Resolution was duly seconded and CARRIED 1803 votes in favour, 66 against and 65 abstentions.

9/58 SPECIAL RESOLUTION 1

The Chairman said that Council had decided to propose some changes to the Articles of Association following feedback from some Ordinary Members. These changes were designed to simplify the rules for filling vacancies when elected Council members cease to hold office and would come into effect from the declaration of the results of the 2015 Council election. There were three parts to the changes.

First, if a vacancy arose because an elected Council member ceased to be a Council member during his/her term of office or insufficient candidates were validly nominated, Council would still be required to appoint an individual to fill that vacancy. However, the appointment would now only last until the declaration of the results of the next election. So appointments for longer periods would no longer be possible.

Second, the power to fill vacancies created by an elected Council member ceasing office during their term would be transferred from Council to Ordinary Members, other than the short period until the declaration of the results of the next election. If a ballot was required for electing members to Council (and it almost always was), the candidate who was elected by the fewest votes, would be the candidate deemed to fill a vacancy caused by the elected Council member ceasing office during their term.

Third, individuals who were appointed would not, as was currently the case, be able to add this appointed period onto the maximum nine consecutive years before they were required to have a two-year break period.

The Chairman proposed the Special Resolution.

Mr Adriano noted the complexity of the proposed changes to the Articles to achieve these goals and asked if the legal advice had been thorough so that there was no risk of a flaw being found and a further proposal having to be submitted to members.

Ms Averty (General Counsel) said that both she and external advisers had reviewed the proposed changes and considered that they were watertight.

10

Mr Hoffman asked whether individuals would still need to be appointed under the new Articles and if so, what was the process was for appointing them.

Ms Averty said there was a minimum of elected Council members under the Articles and falling below would be a breach, so there had be a process for appointing people on an emergency basis until the next AGM. The method for making the appointments was for Council to decide.

Mr Stevens said that he understood in the event of a Council member not being able to complete their service, then the person who came fourth would fill that position. Ms Averty confirmed that if someone resigned during the first year of their term, then Council would need to appoint someone until the AGM. At the subsequent election, the person coming fourth would be appointed to fill that position for the remaining two-year term.

Mr Taylor said that he thought it would have been a good idea to draft the Article changes so that Council should, in the event of a short term vacancy having to be filled, be obliged to approach unsuccessful candidates who had stood in the previous election and approach them in order of non-election to identify whether they would be willing to be appointed for a short term. This should take precedence over any Council discretion on who to appoint.

The Chairman said that the changes proposed were already quite complex. There were alternatives but this is what Council was recommending and it had the effect of transferring power to members and away from Council.

Mr Grant, while supporting the Special Resolution, asked that the person who came fourth in the 2015 elections should be appointed by Council to serve until the declaration of the 2016 election results in January 2017.

The Resolution was duly seconded and CARRIED 1806 votes in favour, 79 against and 48 abstentions

10/58 SPECIAL RESOLUTION 2

The Chairman said that the power to reduce the number of candidates standing in the annual elections to Council to a minimum of three times the number of vacancies, when the number was above that level, was introduced in 1993 and used for the first time in 2014. The Council of Trustees wished to retain that power as there was

11

evidence to suggest that voter turnout decreased when there was a lot of candidates and that the power to reduce the number of candidates represented the right balance between giving members choice and giving so much choice that only a dedicated minority made the effort to vote.

Council had decided to put the matter before members again at the request of several members following the use of this power for the first time in 2014 and the fact that using the power had proved to be controversial. However, the Council’s recommendation was to vote against the resolution. The Chairman then proposed the Special Resolution.

Mr Grant said that he had proposed scrapping this rule and said that skills gaps could be filled through the co-opted process. Mr Grant said that filtering out candidates was patronising and asked that all members should vote for both Special Resolutions.

Mr Hoffman said that first, he did not think the number of candidates should be limited and that the electorate should be left to take the decision on who to vote for. Second, while Council was encouraging people with digital and commercial skills to apply, it should encourage applications from women and ethnic groups and younger people. Was Council restricting people who did not fit?

In reply Ms Oscroft (Deputy Chair) said that there had been considerable debate in 2014 by both the Nomination Committee and Council on the issue of reducing the number of candidates, and the decision to reduce had only been taken after careful consideration and after measuring each candidate against the skills identified. The Committee had also taken cognisance of the fact that too many candidates could overload the electorate with too much information which in turn would impact in a negative way on voting response.

Ms Oscroft also advised that because of Charity Commission guidance and equalities legislation, Consumers’ Association was not permitted to positively discriminate. Consequently, the advertisement for candidates in the summer had stated that CA was looking to elect candidates who would represent consumers across the UK.

Mr Pittock said that he had been treated fairly when the Nomination Committee had not permitted his nomination to go forward in 2014. However, increasing the electorate meant that the election became more of a lottery. Was the decision to allow both Ordinary and Associate members the right to vote going to be reviewed?

12

The Chairman said that this was not something he could speculate on as any proposal for change would be a matter for his successor.

The Chief Executive said that extending the franchise had removed the charge that Which? could not speak on behalf of all consumers.

The Special Resolution was duly seconded and NOT CARRIED. 645 votes in favour, 1173 against and 115 abstentions

There being no other business, the meeting ended at 1.20pm

The Chairman said that he would now devote time to questions from the floor. These questions, together with the responses, are attached to the minutes.

Election of members of the Council 2015

The results of the 2015 elections which closed on Friday 8 January 2016 are as follows:

3 vacancies

Donald Grant 12,140 ELECTED

Shirley Bailey-Wood 10,409 ELECTED

Melanie Fuller 9,900 ELECTED

Harriet Kimbell 9,605

Brian Yates 9,256

Haidi Jenkin 7,122

Matthew Batstone 6,865

Angela Henry 5,829

Tanya Aitken 4,198

Questions and answers dealt with following the conclusion of the Annual General Meeting

Mr Wrench asked whether any progress has been made since the 2014 AGM when he had raised the question of whether BT offered a fair pricing policy given that it charged three months ahead for services purchased.

Mr Wrench said that he had also had a letter from Barclaycard saying that from 1 February the interest changed on his credit card would be related to the Bank of England Base Rate.

Mr Lloyd (Director of Consumer Action) said that Which? had been pressing Ofcom to look into the wider telecoms market more closely and they had recently launched a major review of digital

13

communications. Pricing practices would be explored as part of that review. It was the case that across telecoms in general, it was difficult to understand the cost of fixed price contracts.

On Barclaycard, it would be helpful to see the details of the letter sent to Mr Wrench.

Mr Fowler said that he had heard on the Today programme that government suppliers were more responsible to consumers by prompting people to access services through the web. Some of these websites were poor and difficult to navigate.

Mr Lloyd agreed that this was an important point. Which? spent a lot of time with the Treasury feeding back consumer views on their websites.

Mr Adriano asked about the Which? awards and asked whether Volkswagen and Aldi would continue to be recommended as a best buys given recent adverse publicity. Furthermore, would Which? change its methodology or consider dropping the awards programme.

Mr Lloyd said that there was a positive advantage to consumers in promoting the award winners and there was no intention of dropping the awards. Action had been taken in the specific case of Volkswagen so that they were no longer allowed to use the award in their publications.

Finally the Chairman said he would like to hand over to Tim Gardam who would be taking over as Chairman.

Mr Gardam said he was very honoured to succeed Paddy Barwise and was looking forward to the challenge. Which? was one of the most significant voices in British Society and, for all its long heritage, had never been more important with consumer choices becoming ever more complex and dominating everyday lives. Which? was a forthright, clear, independent and a trusted source of advice and that was how it should continue.

Mr Gardam said that Which? was its membership and its membership was Which?. The AGM was a vital way to connect with members and Mr Gardam said that this would inform his thinking and Council’s thinking in the year ahead.

In conclusion, Mr Gardam expressed his thanks on behalf of the membership to Paddy Barwise who had been so committed to Which? over the previous ten years.