Four major UK regulators must provide greater evidence that they are protecting consumers’ interests, a report from the National Audit Office (NAO) has said.
The Financial Conduct Authority (FCA), Ofwat, Ofgem and Ofcom good insight into the difficulties faced by customers, but can’t prove they are effectively protecting them, the report said.
The most frequently cited issue across the four sectors was how to handle customer debt. It found affordability concerns play out differently in individual markets, but people who fall behind on their bills can often struggle across multiple services.
It also found customers often have difficulty in finding the most appropriate deals or services, often meaning they pay more for the same service as new customers, amounting to an extra £4.1bn per year. Vulnerable customers are the least likely group to switch, the NAO found.
Overall, UK consumers spent more than £140bn on bills in water, energy and telecoms, and fees and charges in financial services, in 2017.
The NAO said the regulators should do more to translate their high-level intended consumer outcomes into practical terms.
It added they should do more to measure their performance "so that they can understand what is working well for consumers and what isn’t"
In particular, it said, the four regulators don’t have common ways of measuring or sharing issues which affect customers across their sectors.
Amyas Morse, the head of the NAO, said: “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.”
The FCA said it “welcomes” the NAO’s findings. Chief executive Andrew Bailey said: “Protecting consumers is absolutely central to the FCA and where we have identified potential harm, we have taken decisive action. Our recent work in the high-cost credit market, including implementation of the price cap in the rent-to-own market, is just one example of this.
“Understanding the impact of our interventions is an important part of our mission to ensure that financial markets are working in consumers’ best interests. We will consider the National Audit Office’s recommendations when evaluating our work to protect consumers.”
Ofgem said in a statement: “We agree with the NAO that regulators need to effectively measure their impact to help deliver the best possible outcomes for consumers.
Ofwat said in its response that it would look at the NAO’s recommendations, while Ofcom said it would work closely with other regulators to find more ways to measure the effectiveness of its work.