Four of the major industry regulators in the UK are not doing enough to protect consumers, according to the National Audit Office.
The public spending watchdog has said the regulators understand the ‘significant difficulties’ consumers are facing, but they can’t prove what they are doing is helping vulnerable customers enough. The four regulators in question are Ofwat, Ofgem, Ofcom and the Financial Conduct Authority. They regulate the water, energy, telecommunications and financial services industries respectively.
According to the NAO, the most common problem that consumers are dealing with is managing their debt and credit payments. Other issues mentioned include broadband connectivity problems and water shortages during cold weather last year. They said that around 15% of broadband customers had complained about connection problems or other issues in 2018.
Customers have also been faced with real-term price rises in recent years. Electricity bills have gone up 37% on average since 2007, while gas has gone up by 28% and water by 6% over the same period.
Many consumers are paying too much for both their energy and broadband. According to the NAO, more vulnerable customers are less likely to do price comparisons and switch energy supplier or broadband provider, which could save them money. Customers aren’t being rewarded for staying loyal to any one company, and the NAO have said consumers are paying a total of £4.1bn every year on top of what they could be spending, due to not switching.
The NAO have said there is a mismatch between what the regulators say they want for consumers with what they are realistically targeting, and they are not specific enough in detailing what consumer outcomes they are hoping to achieve.
Recently, the energy regulator Ofgem announced they were introducing a price cap on standard variable tariffs, which was designed to help the most vulnerable customers from being ripped off. However, the cap will rise by over 10% in April, just three months after it was introduced on January 1.
“Regulators need to do more to show the concrete results they are aiming to achieve for consumers,” said Amyas Morse, head of the NAO. “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 people’s practical concerns and pressures.”
The regulators have all agreed with what the NAO has said and have vowed to listen to their recommendations and do more to protect consumers.
“We agree with the NAO that regulators need to effectively measure their impact to help deliver the best possible outcomes for consumers,” said a spokesperson for Ofgem, while a spokesperson for Ofcom said: “We’ll keep working closely with other regulators, exploring different ways to measure the effectiveness of our work.”
The chief executive of the FCA, Andrew Bailey, said: “Understanding the impact of our interventions is an important part of our mission to ensure that financial markets are working in consumers’ best interests.”