Wine investment industry must rectify glaring error

Much like dank, overcast weather conditions which accompany saturating rainfall, no-one cares for the telephone that rings at an odd hour, heralding an unwanted cold call.

Sure, an unsolicited call provides a great opportunity for well-rehearsed one-liners and other amusing ruses as you hear the rustle of a well-worn script and the caller clearing his throat as he endeavours to speak uninterrupted for eight minutes.

But I’ve never got round to speaking in a Dalek voice, nor asked the caller the meaning of life because I have no desire to engage the person in conversation.

Generally, the unsolicited call arrives at a thoroughly inconvenient time, usually during dinner and, as you rush towards the ‘phone, your mild annoyance at being interrupted is rapidly replaced by anger as the caller swings straight into his sales spiel. However, rather than hurl abuse at someone who is only trying to earn a living, nowadays I tend to be polite. “Listen mate, I’m in the middle of dinner and I’m not really interested. Do me a favour and take this number off your list. Thanks.”

That few seconds of civility invariably results in undisturbed dinners – at least until the next company manages to get hold of your number. You may, of course, register with the Telephone Preference Service, which is around 98% effective.

So I’ve always wondered what “high pressure telephone selling” is and, more importantly, if such a thing exists, why people put up with it.

Why would you feel pressured by the voice of a person you’ve never met who is invading your privacy to sell you something you don’t want? If push comes to shove, simply replace the receiver and report the call.

I mention this as a new self regulatory body for wine investment companies, the Wine Investment Association (WIA), was launched at the London offices of accountancy firm Mazars yesterday.

The new body also published a Code of Practice for trade and would-be WIA members while announcing the start of a consultation period, during which it would like to establish robust policies and procedures designed to provide fine wine investors with much greater security. It’s a laudable aim.

There is clearly a need for such a body and its arrival is to be welcomed only a few days after a company called Vinance (Geddit?), apparently a well-known wine portfolio manager and broker went into administration. Based in Greenwich, the company managed more than £50 million worth of fine wine assets for thousands of investors in nine countries.   

At this point, it’s worth noting that investing in fine wines is not regulated by the Financial Services Authority. In effect, this means that marketing statements issued by brokers can make unsubstantiated claims of colossal returns, either in print or, depressingly, often over the phone and investors would not be covered by the Financial Services Compensation Scheme should they feel they had been mis-sold.

Most people know this, so it will be Mazars’ role to audit WIA members’ internal systems and undertake annual compliance audits thereafter. The accountants will also examine the process of fine wine investment, from acquisition to storage, ensuring investor ownership is accurately recorded and guaranteeing the wine is physically present in storage and ring-fenced from the danger of company failure.   

This is all fine and dandy, but it is astonishing to learn that the WIA’s  Code of Practice has not outlawed cold calling. If there is one flaw which has damaged the fine wine investment industry’s credibility, it is cold calling. The process is often blamed for effectively defrauding investors by selling them over-priced or unsuitable wines, using those ‘high pressure sales techniques’ referred to above.

There is still time for the WIA and Mazars to rectify what is surely an oversight. Should they fail to do so, the industry will continue to appear a rather tacky, slightly dodgy one to outsiders. This would be a pity because most practitioners and wine brokers are perfectly reasonable folk.

The WIA has until 20th January to banish cold calling. It is, if you’ll excuse the pun, an easy call - there’s no need for it and very, very few prospective wine investors actually want it. In fact, get rid of cold calling and more people would probably be interested in investing in a potentially attractive alternative asset.

posted on 30 November 2012 18:26 byPJS