Draft AGM Minutes 2014

'''Minutes of the fifty-seventh Annual General Meeting of CONSUMERS' ASSOCIATION Held on Monday 17 November 2014 at The King's Fund, 11-13 Cavendish Square, London, W1G PAN starting at 11.45am'''

PRESENT: Professor Patrick Barwise (Chairman), Jenny Oscroft (Deputy

Chairman), Paul Preston (Deputy Chairman), Peter Vicary-Smith (Chief Executive), Andrew Reading (Company Secretary) and some 116 Ordinary Members of the Association.

''' 1/57 MINUTES OF THE 56 ANNUAL GENERAL MEETING OF CONSUMERS' '''

ASSOCIATION HELD ON 19 NOVEMBER 2013

The Chairman proposed:

THAT the Minutes of the Annual General Meeting held on 19 November 2013 be APPROVED.

The Resolution was duly seconded and CARRIED, 2088 votes in favour, 11 against and 79 abstentions.

2/57 CHAIRMAN'S STATEMENT

The Chairman said that his report for 2014 would reflect on Which?'s progress over the last ten years. Over this period, Which? had taken decisive and significant steps towards achieving world class status. This progress had taken talent, hard work and courage from those responsible. Attracting and retaining talent had been a crucial part of achieving that success.

The ten years had seen a 60% increase in revenue, a near 80% increase in subscriptions and a fourfold increase in profits. These were exceptional results, particularly against the backdrop of a stagnant publishing industry. However, only if Which? continued to succeed commercially would it be able to support its wider work on behalf of UK consumers, retain its independence and ensure its survival for future generations. Such continuing success must never be taken for granted.

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In 2004, Which? had invested £1.9m in its charitable activities. Ten years later, this had increased to £10.9m. 2014 had seen the launch of two new free advice sites - Which? Elderly Care and Which? Birth Choice. Together with Which? University and Which? Consumer Rights, there were now four such free sites. These had been used many millions of times and were also helping Which? Reach different groups of people, especially teenagers and young women.

Which?'s greater financial strength meant that its influence with and on behalf of consumers continued to grow. In 2014, it had been mentioned in Parliament 320 times and directly engaged on more than 300 occasions with senior executives, MPs and other opinion formers. Which? had also been mentioned in more than 2,500 national media articles.

As a result of all this high profile activity, some significant changes had been achieved, with Which? central to forcing more decisive action from the regulators of broken markets. After years of campaigning, Ofgem had finally referred the energy market to the Competition and Markets Authority (CMA) for a full competition investigation. Very recently, the CMA had confirmed it would also be undertaking an inquiry into current accounts.

The success of the subscription model had allowed investment in a portfolio of new ventures designed to deliver additional, and more diverse, revenue streams. However, these businesses would take time to establish and their success could never be guaranteed. In the current year the decision had been taken to close 'Right Choice' in India when it became clear that the risks outweighed the likely gains. However, Which? Mortgage Advisers and Which? Trusted Traders were both showing more promise. It was important to innovate as, in the long term, the risk of not changing would be even riskier.

This also meant that, to get the best for Which?, it was necessary to benchmark reward for key roles within the commercial world where necessary, so as to attract and retain people with top class skills. In governance terms, it also meant ensuring that the governance body was of the right size and had the right skills to do its job. This was why the overall size of Council had been reduced from 18 to 15 in 2012 and Council had decided in 2013 to be much clearer about the skills needed from candidates standing for election to Council. When faced with fifteen candidates in 2014, the list had been narrowed to the ten who, in the view of the Nomination Committee and then Council, best demonstrated the skills sought.

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In conclusion, the Chairman said that the transformational results over the last ten years were exceptional and something to be proud of. However, the team at Which? was ambitious for more and in particular, to ensure that the organisation's long term future was secured.

3/57 CHIEF EXECUTIVE'S STATEMENT

The Chief Executive said that when he joined Which? in 2004, he knew it would be an interesting and attractive job, but did not appreciate how much potential existed. While the organisation had a proud heritage and a famous trusted brand, it was struggling commercially yet there was still much more to do in terms of Which? members and consumers at large.

Ten years on and much had been achieved. The commercial performance had improved steadily and significantly with the core subscription business growing by 63% from £55m to £89.5m. Subscription growth had been even stronger with 830,000 subscriptions to Which? products compared with 1.5 million in 2014 -an increase of 78%. As a result, Which? was now the UK's bestselling monthly magazine and one of the best-selling monthly magazines in Europe with a bigger circulation than any other independent European consumer organisation. Furthermore, annual profits from the core business had increased four-fold over the period from £5.4m to £22.8m allowing the organisation to increase its charitable spend and crucially to invest in securing the future income. This growth in revenues had been achieved while keeping price increases below the rate of inflation over the period.

Growth had been achieved by focusing relentlessly on what customers wanted together with continued investment in testing. There had also been a significant, but necessary, on-going investment in the digital delivery of Which? information, with £4.3m being spent on improving the online content and mobile apps. However, Which? continued to operate in a highly competitive and volatile environment so it was important to stay focused and continue to invest and innovate.

The strong commercial results enabled Which? to first, support all UK consumers with an ever-wider range of activities and second, to invest in developing new businesses that both met consumers' needs and secured the organisation's future by diversifying income streams. On campaigning, Which? had taken a proactive role in helping to shape the government pledge to offer everyone approaching retirement free impartial guidance, known as the Guidance Guarantee, either online or over the phone or face to face.

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Which? had remained closely involved with a wide range of changes that were being introduced to ensure that banking improved radically in future years. The Banking Reform Act became law in December 2014, legislating for many of the recommendations in the Which? Future of Banking Commission Report in 2010 - including the separation of retail and investment banking. On telecoms, a nuisance calls taskforce had been established to tackle the issue of unwanted marketing calls and texts, and Which? had also addressed the problem of in contract price rises, securing a ruling from Ofcom that people should be able to exit their mobile contract without penalty if their provider put up prices.

While nearly £11m had been invested in this type of work in the current year, the aim was to double this in years to come. However, it was necessary to invest in the new ventures alongside the core in order to deliver this goal. Entering these markets would allow profitable businesses to be built that would enable more to be spent on charitable activity as well as reducing reliance on the core business. Second, Which? was entering markets where it was able to offer consumers impartial services where they had been poorly served by others. Third, in markets where consumers had been put last, Which? could demonstrate it was possible to deliver profitable businesses.

It would take time to build businesses that would meet those objectives, but there had been good progress in the current year with both Which? Financial Services and Which? Trusted Traders. In India, the decision had been taken to close the Right Choice pri

nt publication when it became clear that despite excellent feedback on the magazine, it would not be possible to increase the number of subscriptions to the level needed to build a viable business

Finally, with help from the Chairman, Which? had started to use its rich understanding of how real consumers behaved to help companies and regulators think through what products and services they needed to offer consumers to be fair and helpful in their lives.

REPORT OF THE COUNCIL OF TRUSTEES AND ACCOUNTS FOR THE YEAR ENDING 30 JUNE 2014

The Chairman proposed:

THAT the Annual Report and Accounts for the year ending 30 June 2014 be received.

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Mr Pittock noted that the closed section of the staff pension scheme had been referred to in the Report and Accounts as both the defined benefit and the hybrid scheme. Mr Cadranel (Group Finance Director) confirmed that they were one and the same.

Mr Ghosh said that over the last three years he had raised questions about the viability and risks attached to the Right Choice venture in India, given that many British companies had run into trouble when starting up ventures abroad. Mr Ghosh said that he would have expected Which? to have avoided the pitfalls and wondered whether proper consideration had been given to the project. Mr Ghosh also asked about the investment made and the accounting for that investment.

The Chief Executive said that a total of £10.5m had been invested in the venture and that all the investment in the business had been written off as it was made. The investment had to be seen in the context of a Business Plan that had been expected to generate long-term profits of £12.5m a year. In late 2013, there had been encouraging news on the number of subscribers, as reported to the 2013 AGM. However, renewal rates had subsequently proved to be much less than they needed to be and so the decision had been taken to close the publication. There had been extensive discussion at Board level throughout.

Mr Marsden asked about the running costs of the continuing online presence in India and Mr Vicary-Smith said that £300,000 would be spent in the current year while this avenue was evaluated.

Mr Hoffman said that £22.4m was being spent on charitable activities according to the Accounts and asked about the difference between spending on consumer research and promoting consumer interests.

Mr Cadranel said that the charity funded the research for the magazine and the commercial business paid for the research - but agreed that the way it was, and for many years had been reported, was not entirely intuitive.

A member said that his question concerned the governance arrangements concerning the India venture. The 2013 AGM minute about India had been very positive and yet only six months later the business had closed. What was the approach to risk and did Council consider this issue thoroughly over more than four years?

The Chief Executive said that investment and performance in India had been repeatedly discussed by Council, the Which? Limited Board and the Which? International Board over that four year period.

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Unfortunately, it had taken a long time to identify a recruitment mechanic in India that worked, but there had been good reason to believe that the mechanic had been found by late 2013. However,

poor renewals and the difficulties with getting the banks to use direct debit had meant that closure became inevitable.

Mr Preston said that, as Chair of the Which? International Board, he had been very positive about the India venture and was disappointed to find, shortly after the AGM, that retention was poor and the Indian banks were still not fully supporting direct debit payments. It had been a very tough decision to take Which? out of India but the charity could not continue to spend £2m each year without clearer signs of a return.

Mr Taylor said that there were other consumer groups in India before Which? entered the market, and that one Indian group had given Which? its mailing list. Mr Taylor asked whether Which? was continuing with an online presence in India because there was an obligation to that consumer group.

Mr Vicary-Smith said that this was not the case. Which? had sought partnerships in India, but nothing suitable had been identified. One group had supplied Which? with its mailing list, but those names had not converted well. It had always been the intention to help other consumer groups in India via Consumers' International.

The Resolution was duly seconded and CARRIED 2080 votes in favour, 11 against and 79 abstentions

5/57 APPOINTMENT, NOMINATION AND RETIREMENT OF MEMBERS OF THE COUNCIL OF TRUSTEES

The Chairman said that there were three vacancies on the Council of Trustees and thanked Peter Cartwright who was not seeking reelection. Interest had been exceptionally high with fifteen applications received, the highest number for over twenty years. As previously explained in the letter enclosed with the Annual Report and Accounts, Council had taken the decision, in accordance with powers in the Articles of Association, to reduce the number of candidates to the ten felt to be the best match against the skills outlined by Council

The ten approved nominations for the three vacancies were Andrew Burman, Christopher Bisco, Peter Calver, Jeanie Cruickshank, Sharon Darcy, Haidi Jenkin, Tim Leunig, Peter Shears, Tim Roberson and Jonathan Thompson.

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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 together with 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 9 January 2015. 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.

(*The results of the 2014 Council elections are given below)

Mr Godliman asked whether the five excluded candidates had been given a right of appeal. The Chairman confirmed that there had been an appeals process and that this had been undertaken by another member of Council. Three candidates had appealed against the Council decision not to approve their nominations.

A member asked how many women had applied and was advised that there had been four. The Chairman said that Council wanted to encourage women to stand for election whilst avoiding positive discrimination.

Mr Nairn asked about the geographical representation on Council and noted that eleven of the Council members were from the home counties, with no representation from Wales, Scotland and Northern Ireland.

Mr Gardner said that there was a membership skew towards London and the South East and there was an under representation in Scotland, Wales and the North East.

Ms Oscroft said that geographical representation and gender were matters that had occupied the time of the Nomination Committee. However, when it came to the process of deciding who to take forward, the most important factor was finding the best fit with the skills that Council had identified. For 2014, candidates with strategic experience at senior level in digital media or strategic/senior experience in the commercial sector or high level experience of policy development, particularly in personal finance, utilities (especially energy), health care or higher education, had been sought. Which? was considerably larger and more complicated than it had been ten years earlier and the priority had to be to have a Council with the skills to govern the organisation and ensure delivery of the Mission.

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Mr Roche asked whether geographical location should be omitted from candidate statements to avoid any suggestion of bias. The Chairman said that the majority view was that members wanted to know where candidates were based.

Mr Taylor said that given the requirement to appoint two Council members from the date of the AGM so as to comply with the Articles, could those two appointments be made from those candidates for the 2014 Council election who had been excluded.

The Chief Executive said that the answer would be 'no'. If someone had not been in the top ten candidates in terms of meeting the criteria, they would not rank highly as potential appointees.

Ms Oscroft reiterated that appointing Council members for short periods was a temporary arrangement to equalize the number of elected vacancies each year.

6/57 RE-APPOINTMENT OF AUDITORS

The Chairman proposed:

THAT PricewaterhouseCoopers LLP be re-appointed as auditors to hold office until the conclusion of the next Annual 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.

A member asked whether the audit costs were appropriate and this was confirmed.

The Resolution was duly seconded and CARRIED, 1939 votes in favour 142 against and 97 abstentions.

7/57 REMUNERATION OF THE AUDITORS

The Chairman proposed:

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

The Resolution was duly seconded and CARRIED 2024 votes in favour, 70 votes against and 84 abstentions.

There being no other business, the meeting ended at 1.25pm

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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 2014

The results of the 2014 elections which closed on Friday 9 January 2015 are as follows:

ELECTED ELECTED ELECTED

3 vacancies

Peter Shears 10,932

Sharon Darcy 10,367

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

Mr Lewis asked for an update on questions he had raised in 2013 as follows:

First, what was the current status with Citizens Advice Bureaux? Second, how can the manufacturers of own brand products in shops be identified in the magazines? Third, was it possible to report on low cost brands in the magazines? Fourth, could the titles of free guides issued by Which? be listed in the magazine? Fifth, hospital car park charges were still a problem although there had been some progress nationally. Sixth, product numbers of items in the shops were not consistent across different shops. Also was it correct to assume that a Best Buy Sony 32 inch television was of the same quality as a 40 inch television by the same manufacturer? Finally, could Which? pressurise shops to promote more sugar free products?

Mr Lloyd (Director of Consumer Action) said that Citizens Advice Bureaus (CABs) had been given a lot of additional responsibilities by government and were reliant on funding by local authorities. They had also been given responsibility for delivering the face to face component of the guidance guarantee for the new pension reforms. Which? had consistently argued that CABs were taking on too much and that consumers might not get the protection and the publicly funded advocacy they needed.

On hospital car parks, there had been progress with the Secretary of State for Health in putting pressure on Trusts to keep costs down as this featured consistently highly in consumer complaints on health services. Making it easier and clearer for people to complain was something Which? had focused on. Finally Which? was represented on a strategy group with government and industry for the 'Responsibility Deal' that was tasked with reducing high levels of salt, fat and sugar and use of clearer labelling. There had been some success with large global manufacturers and Which? was in discussions with Ministers and Shadow Ministers as to what should be put in place after the next election.

Mr Headland (Editor of Which?) said there was an advertisement that ran from time to time in Which? listing the titles of free guides and showing where these could be downloaded from the website. The way this was displayed in the magazine would be reviewed in the next year.

Ms Stopford (Head of Research and Content Creation) said that Which? was starting to focus more on looking at low value non-food items from Lidl and Aldi. However, this was much harder than with higher value products such as TVs or domestic

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appliances, as stock came in and was not replaced. On the question of similar models, a lot of work had taken place over the last year on how the strategy could be improved and results stretched to similar models. As part of the whole of market strategy introduced in 2014, Which? wanted to say something about every model in the market in certain product areas.

The Chief Executive said that you cannot assume that a Best Buy 32 inch television from one manufacturer meant that a 40 inch television by the same manufacture would also be a Best Buy.

Mr Kitchen said that Which? operated on various platforms but there was little consistency between them and it would be helpful to have the same information across all platforms. The sound quality of televisions was a particular problem,

given the thinner screens. A larger cheaper television was not so cheap when the purchase of a sound bar was included.

Mr Gardner (Managing Director of Which? Publishing) said that consistency across the various platforms was very important. However, there were differences in the presentation and it wasn't possible to get all research results in the magazines. Differences would exist with the tablet edition. People were often in a more browsing mode in the magazines whereas online, members wanted to get to a decision more quickly. It was important to engage with industry on the television/sound bar issue.

Mr Anderson congratulated Mr Lloyd on the report on the big six energy companies that showed discrimination against existing customers. Nuisance calls were very annoying and potentially fraudulent. Second, Mr Anderson had written to British Gas seeking clarification on smart meters and potential security risks, but had received an unhelpful response. Was Which? looking at this issue?

Mr Lloyd said British Gas was ahead of the competition in installing smart meters. Which? had been pressing them on the issues of data security and cost and the risk that their meters would be obsolete within 18 months and would have to be replaced. The same issue had been raised with the Energy Department and it now seemed likely that the installation programme would be reined back after the general election.

Mr Wrench asked whether BT offered a fair pricing policy as it charged three months ahead for services purchased. Furthermore there should be a fixed price for that period. The Chief Executive said he would look into this point.

Mr Stevens said that two years ago, the Big Switch campaign had taken place and that this had been a great success. Was there any suggestion that the campaign be repeated?

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Mr Lloyd said that since the Big Switch, Which? had gone into partnership with some local authorities to reach people who had not been involved in the national switch. The results had been mixed, and Which? was now focusing on clarifying the rules around collective switching. There was now more interest in looking at other markets where the same principles could be applied.

Mr Stevens asked whether you could you signpost people to other collective switches through publication in Which? Mr Lloyd said it was good point although the collective deal might not always be the best one for an individual.

Mr Sofocli said that on the testing of consumer items, one item that seemed to be missing was the attitude of manufacturers to repairs. The examples of a coffee maker and rechargeable toothbrush were given.

/As Stopford said that these were good points. Repairs were looked at as a standalone as part of the magazine, as was the question of whether it was worth repairing or replacing - however it was possible that more could be done.

Mr Miller said that while he had received a letter from Mr Patrick Taylor, a colleague had not and questioned why this was the case. Second, the letter from Mr Taylor was dated 14 October 2014, but was only received on 13 November. Third he was concerned that all fifteen nominations should have been approved and been submitted to the members. Mr Miller suggested that either the Article that permitted this reduction in the number of candidates be reviewed or that Council didn't apply that rule in future.

The Chairman said that, while Mr Taylor had sent letters to a considerable number of Ordinary Members, the precise number of letters and the names of individuals who had been sent letters had not been communicated to Which? Two batches of letters had been sent by Mr Taylor to Which? to send on to those Ordinary Members who had given the Registered Office as their address. The first batch of letters, around 1000, was received without warning on 17 October and the contents became apparent only on 20 October. The mailing data supplied contained a number of errors and Which? had also needed to work with ERS to put in place a process to handle the invalid pre-marked proxy form included with the letter. The second batch of more than 1000 letters, received on 4 November, were still dated 14 October. This left very little time to distribute them, but thanks to considerable effort from staff, the second batch of letters was sent on 11 November.

The option to restrict the number of candidates had been introduced in 1993, before any of the current Council members' periods of office. The need to apply that rule had arisen in 2014 as a result of a large slate of candidates. Too many candidates tended to reduce response rates at a time when the candidate form had

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been amended to allow candidates more space for their personal statements in order to give members more information about the candidate.

Mr Waller suggested that the Council's oversight had reduced in recent years,

which was to be regretted, as was the change of name from Council of Management to the Council of Trustees. Furthermore, the number of Council meetings had fallen from eight to four. Ordinary members were by and large engaged and when the decision was made to allow all subscribers to vote, it had meant that a much smaller proportion of the electorate would participate. This in turn might have resulted in more co-options than previously the case.

The Chairman rejected the view that governance had been weakened. The roles of the various Boards had been clarified. There had been an increase in the number of Which? Limited Board meetings. The reduction in the number of Council meetings had been counterbalanced by an increase in the length of meetings in order to maintain the same total annual meeting time. However, it had become apparent quite recently that the increasing complexity of the organisation meant that more decisions were being taken between meetings. Consequently more Council meetings would be scheduled, leading to a significant increase in the total annual meeting time compared with previous years.

In terms of the number of Council members, the transition to a process of having three elected vacancies a year had meant that temporary short term appointments had to be made. The overall reduction in the size of Council had been taken in order to increase Council's effectiveness, in conjunction with a decision to be more explicit about the skills sought from elected Council members and a decision to use recruitment consultants when searching for potential co-opted Council members.

The Chairman concluded the discussion at this point and thanked members for their contributions. Members of Council and senior staff would be able to answer further questions over lunch.

he meeting ended at 1.55pm.

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