The National Audit Office (NAO) has said that four major UK regulators need to do more to prove they are offering enough protection to those who need it.
According to the NAO, Ofwat, Ofgem, Ofcom and the Financial Conduct Authority (FCA) understand the “significant difficulties” facing consumers, but they are unable to prove if they are “effectively responding” to consumer concerns or offering enough protection for those who need it.
In a statement, the NAO said: “Regulators have a statutory responsibility to protect the interests of consumers. This includes promoting competition, encouraging fair prices, setting maximum prices where competition is insufficient, ensuring adequate services are delivered and preventing unfair practices.”
The watchdog highlighted that the most common consumers seek help with across all four regulators sectors is dealing with debt associated to paying bills and credit repayments.
The office added that people “find it difficult” to access the best deal or service, resulting in customers who do not switch typically paying more for the same service as new customers, dubbed the “loyalty penalty”. The watchdog calculated that this penalty costs consumers around £4.1bn a year at least, with vulnerable customers the least likely to switch and take advantage of better deals.
The NAO acknowledged that the regulators have developed a good understanding of these consumer issues through their own research, insight and working with stakeholders. However, the NAO noted that government, parliament and other stakeholders have “expressed concerns” about whether these sectors were working “as well as they can” for consumers, therefore questioning the regulators effectiveness.
The watchdog recommended that: “regulators need to do more to measure their performance so that they can understand what is working well for consumers and what isn’t. This will help regulators prioritise their interventions, which is important given the diversity and conflict of responsibilities they have to consumers, Parliament and government.”
Furthermore, it said that the regulators have “not been specific enough” in defining the overall outcomes they want to achieve for consumers.
NAO head Amyas Morse concluded: “Regulators need to do more to show the concrete results they are aiming to achieve for consumers. I understand that there is a difficult balance to be struck between long- and short-term outcomes, between the needs of businesses and the interests of consumers.
"But, at present, the regulators’ results can come across as somewhat academic and detached from peoples’ practical concerns and pressures.”
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