POLLING companies are warned today that they could face new regulatory oversight if rules over the selling of exit poll data at elections and referendums to private companies are “not brought up to scratch”.
The House of Commons Treasury Committee suggests the current system poses risks to the integrity of the UK’s financial markets.
In June, it was suggested that the sale of exit poll data before the 2016 EU referendum by the likes of ICM, YouGov and Survation had produced “one of the most profitable single days” in the history of the hedge fund industry.
Currency speculators were said to have used inaccurate early predictions of a Remain victory to profit by “shorting” the pound ie gambling on its rise and fall.
The pound was trading above $1.50 on the eve of the vote before tumbling to $1.32 when it became clear that Leave was to emerge victorious, netting millions for those on the right side of the bet.
Scottish Labour peer, Lord Foulkes, called for a parliamentary inquiry.
At the time, Nigel Farage, the former Ukip leader, who was previously a City of London broker, forcefully denied placing any currency bets against sterling ahead of the referendum result.
Under UK electoral law it is illegal to “publish” exit polls before 10pm on the day of an election or referendum. But hedge funds and pollsters appear to have interpreted the law in a way that allowed the private provision of exit poll data.
In a letter to Professor Sir John Curtice, the eminent psephologist from Strathclyde University, who is President of the British Polling Council, Nicky Morgan, Chairwoman of the Commons Treasury Committee, suggests incorporating certain requirements on polling companies into the BPC’s rules to help improve public confidence in polls.
She said: “During election and referendum campaigns, polling companies present themselves as neutral observers of public opinion. Yet behind the scenes, they are selling private polling data to hedge funds to make profitable trades.
“It is understandable why polling firms are attracted to this more lucrative private work. But there is a perverse commercial incentive to provide misleading information to the public, whilst providing more accurate - and lucrative - analysis to private clients.”
The former UK Education Secretary said the failure to manage this conflict of interest “raised doubts over the integrity of the polling industry’s business model and risks damaging the reputation of UK financial markets”.
She went on: “I am also concerned that the legal restrictions on public disclosure of exit polls are being used by polling companies to give private clients profitable, and arguably unfair, trading opportunities.”
Mrs Morgan added: “If the BPC Rules are not brought up to scratch, the Committee may consider the case for regulatory oversight of market-sensitive polling.”
Suggested changes to the rules include:
*informing people quizzed in exit polls that the data they are helping to supply could be used to help private clients make money;
*disclosing, when publishing or discussing published polls, whether or not they have conducted similar work on behalf of private clients and
*revealing if published polls were conducted free of charge or at a discount to the usual fee such work would attract.
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