My Lords, for the purpose of this amendment, perhaps we can accept that we are going to have a CMA, not prejudging what might happen later, because this amendment suggests that if we have one there should be a consumer panel attached to it.
One of the most effective ways of helping to ensure that regulation is always in the hands of consumers, whether they be clients of lawyers, customers of financial services, receivers of radio and TV programmes, or purchasers of food, is to ensure that the regulatory body always, and continuously, hears the voice of consumers. This is particularly important with any regulator seeking to promote competition, as consumers are key to the whole competition remit that we seek for our economy. They understand better than anyone how the market really does or does not work for them. They know about non-price barriers to shopping around; they understand about tie-in deals; and they are the best to judge whether providers, whether of goods or services, are part of a competitive, responsive market.
More than that, consumer panels, made up of people experienced in representing, researching or advocating for consumers, in complaint handling, or in policy development, bring to the regulatory table expertise in hearing the unmet needs of consumers and of measuring their experiences, both satisfactory and unsatisfactory. They are alert to likely future trends; they can assess how policy will impact on actual behaviours, whether of providers or users; and they can make a significant difference to the work plan and priorities of statutory regulators. We have seen this with the Financial Services Authority, where the panel will morph into the same role with the new Financial Conduct Authority, at the Food Standards Agency, and, as I know well from my former role as its chair, in the Legal Services Board’s consumer panel. The Civil Aviation Authority has established one, and the Office of Rail Regulation is looking to create one, having had an informal panel for a couple of years.
It is not merely consumer representatives who want an economy that is consumer and client focused. In his first blog, the new chief executive of the Investment Management Association, Daniel Godfrey, says that one of his two priorities for 2013 is to work in collaboration with regulators and Governments to create a framework which, in his words, protects clients.
There can be no better way to create such a framework than having consumers or their representatives embedded in the regulatory architecture—not simply from the outside, so that they must shout and scream, put out press releases and lobby and harry, in the way that we see and, often, welcome outside consumer bodies doing, but as part of evidence-based and thoughtful development of policy and practice to ensure that the regulator never forgets, in this case, that the whole point of regulation is to promote and protect consumers’ interests.
Indeed, the embedded nature of consumer panels means that they can provide input at the earliest stages of policy formulation before the regulator consults—when, in truth, it has often made up its mind—influencing the culture of the organisation from the inside and helping colleagues to get things right the first time round.
A further advantage is the ability to share market-sensitive information and analysis, which regulators are unlikely to want to show even to consumer bodies, which they generally trust, as well as to test thinking. This can be useful in processes such as price controlling, and for the CMA could be particularly relevant in market investigations. A consumer panel provides expert advice on tap, whereas generalist, outside consumer bodies tend to move in and out of policy areas over time.
Consumer panels are also an important counterweight, especially in areas where industry is well placed to influence or lobby, which would certainly be the case for the CMA. Panels are also surprisingly cost-effective, as being embedded results in economies of scale. In the case of my former Legal Services Consumer Panel, its £44,000 a year budget was a mere pin-prick in the £25 billion of consumer spending in legal services.
Consumer panels also play a key role in accountability by scrutinising the regulator’s work in the name of those whose interests it is meant to pursue. It is very easy, once regulatory institutions have been established, to forget or become rather complacent about the underlying rationale for regulating an economic sector. Moreover, given the effective “outsourcing” of statutory consumer functions, as outlined earlier today by my noble friend Lord Whitty, to non-statutory bodies, with no organisation other than the CMA to oversee or lead these outside bodies, it will be essential that the CMA has clear consumer input to this part of its remit, and that would be a natural task for a consumer panel.
Placing a panel on a statutory footing also guarantees its independence. It can represent the interests of consumers without fear or favour, as the CMA could not terminate a consumer panel if it found it a trifle uncomfortable. Of course, any such panel would need some powers, such as the right to make representations to the CMA, alongside reciprocal duties on the CMA to give reasons when disagreeing with such advice. This would aid transparency but would also be vital to the panel’s ability to influence.
Given the need, in terms of concurrency, for the Secretary of State to consult consumer bodies before removing a regulator’s competitive powers, a CMA consumer panel could have a specific role to play here. Similarly, as is argued in other amendments before the Committee today, a CMA panel would be broader than individual purchasers of goods and services. In particular, the panel would need members who were able to consider the interests of micro-enterprises and small businesses, for example, which sometimes experience even greater detriment than domestic consumers.
The CMA, if it exists, will be a key player in ensuring that our economy is competitive and therefore flourishing, and that it serves the consumer interest well. The creation of a consumer panel would concentrate
minds on the end user—the beneficiary of all this regulation. I know that when the noble Lord, Lord Currie—who is in his place today—was the head of Ofcom, he welcomed, and I believe valued, the role that the consumer panel played in that regulation. Therefore, I do not think that he would fear the creation of a consumer panel for the CMA. I beg to move.
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