My Lords, I start by applauding the contribution made by my noble friend Lady Oppenheim-Barnes in promoting consumer rights. She has outlined her concerns and given her views on what the regulators can do to help consumers, reading from her amendment. Given how much impact her work has had, her input will be invaluable in ensuring that we have a better understanding of what needs to be done when we start the implementation phase of this important Bill.
It is, of course, important that consumer rights in regulated sectors, just as in the rest of the economy,
are protected and promoted; that consumers are given sufficient information to make informed decisions; that they are aware of how to make complaints and seek resolution to disputes; and that they have suitable representation to secure the best possible outcomes. The noble Baroness raised some important issues with this amendment and in our meeting.
However, I am concerned that this amendment would, first, complicate an already complex legislative and governance framework, through which regulators operate, with a number of new rules and requirements. Rather than helping consumers, it could muddy the waters further and lead to complex, unclear decision-making by regulators.
Secondly, it could perversely duplicate the extremely good work already being done across the consumer landscape. There are already various bodies and organisations fulfilling the objectives of this amendment, which I will explain in more depth shortly. In view of the comments made by the noble Baroness, Lady Hayter, I should add that similar concerns relate to Amendment 50C, although that comes from a slightly different angle and would provide, in some circumstances, for a levy.
We must not overlook the good work that economic regulators have done. As noble Lords may know, economic regulators have a statutory duty to take consumer interests into account. The nature of independent regulation means that consumers are at the heart of what they do, and I am confident that this remains the case. If anything, the tone of what I have heard suggests that regulators have not been vocal enough about how much their work helps consumers, so let me highlight a few examples. Average monthly household spend on telecoms services fell by 2.9% in 2013. In addition to this, satisfaction ratings across key telecoms markets are close to or over 90%. The majority of consumers remain satisfied with their service overall. Complaints about fixed-line and mobile mis-selling have decreased. In fixed-line, they decreased from 1,200 per month in April 2005 to just over 400 in 2013, and mobile mis-selling has also reduced very significantly. There is now more choice than ever for consumers, with at least 13 major suppliers of bundled residential services, 114 fixed-line operators and four mobile operators.
Ofcom is pushing to make it easier for consumers to switch providers, which is critical for a well functioning telecoms market. Water leaks are down by 40% since the 1990s, so there is a heritage of affordable water bills, with high-quality drinking water and cleaner rivers. Domestic energy bills, while having increased, are still favourable compared to Europe.
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The process for speeding up switching energy suppliers is taking place, and we aim to reach the point where people can change over in just 24 hours. Even now, more than 2 million customers switched electricity supplier between October and March, with nearly a third picking smaller suppliers. Ofgem has also investigated and fined energy companies over marketing activities such as doorstep selling, which have a detrimental effect on some consumers.
The warm home discount took up to £135 off electricity bills for 2 million households last winter. There are record levels of passenger satisfaction in our railways, despite the record post-war number of journeys made, and Network Rail is on course to deliver its current programme of investment. Regulators have contributed to all those good outcomes for consumers and are continuing to work in the interests of consumers. Without them and their work, consumers would be much worse off than they are today.
The examples given also show how the regulators can adapt to change—a concern emphasised by my noble friend Lady Oppenheim-Barnes. She mentioned a huge £3 million fine being paid to consumers, and of course the FCA example quoted by the noble Baroness is another good example of regulators adapting to change.
I also reiterate the good work done by consumer bodies. Bodies such as the Consumer Council for Water, the Communications Consumer Panel and Citizens Advice were either established through legislation or are registered as charities. Statutory regulators such as the Civil Aviation Authority have also created independent, internal consumer panels to challenge and advise on policy from a consumer interest perspective. All those bodies play a huge role in helping consumers, meeting the very objectives behind these amendments—in particular around providing intelligible information and having consumer representation on regulators’ governing bodies to get a better deal for the consumer.
There are examples where consumer bodies have had real bite. The Consumer Council for Water negotiated with 11 water companies in response to rising profits for them and rising bills for consumers. Thanks to those discussions, the water companies have agreed to return £1 billion of that financial gain to consumers. Another result of CCW pressure is the fact that all but two water companies submitted plans in December 2013, pledging to keep prices at or below inflation until 2020. The number of complaints to water companies has reduced for the fifth successive year, and the CCW played a crucial role there.
As I have said on many occasions, Consumer Futures, now part of Citizens Advice, has done a huge amount on behalf of consumers to secure the best deals for them in industries such as energy and post and to help with redress. For example, the strength of its advocacy and evidence led to Ofcom reversing its original decision and secured a price cap for second-class mail, providing real security for those who rely on sending letters and who are financially disadvantaged. It also constantly keeps energy companies on their toes. It helped secure £55 million of repayments by npower due to unfair billing charges; npower has said that it is investing £20 million to resolve those issues fully.
Let us not forget the superb work of Citizens Advice, because its job is to provide consumers with intelligible information across a wide range of sectors. Its success has been outstanding, and it works across all the utility sectors that these amendments are designed to address. It has helped millions through its website and over the phone; 86% of consumers reported a positive impact of advice on their lives, and 84% said that their understanding of their rights had increased.
The regulators and the consumer bodies uphold the rights of consumers, providing sufficient representation to them and promoting fair and reasonable practices. As such, I do not think these amendments would, in practice, achieve anything that is not already being done. It is more likely to bring harm than benefit. Regulators already operate within a complex legislative and governance framework. One of the key things that the Government can do to help is to make sure that the duties we ask the regulators to perform have real clarity and focus. The more duties we place on them, or the more we prescribe them, the harder we make life for the regulators. This, sadly, has practical consequences that are bad for consumers.
Regulators may take longer to make their decisions with the sort of changes under discussion. They might face a greater risk of legal challenge on the grounds that they have allegedly not taken account of all elements of their duties, even when they have acted in the right way. This is to the detriment of everyone, including consumers, and benefits only the lawyers. The cost of regulation itself would increase. Investors would look at regulated markets and factor in the greater risk to them of protracted regulation, which means higher costs. These higher costs find their way to the consumer’s bill.
In summary, I have enormous sympathy with the good intention behind these amendments. However, I strongly feel that there is a lot of good work already happening—it has obviously taken time—to promote consumer rights and representation in our regulated sectors. The consequences of adding these duties to an already complex legislative framework for regulators are likely to be worse outcomes for consumers and business at a time when there is a drive to cut the costs of regulation and increase efficiency, which passes through to the consumer.
Again, I salute the wonderful work being done by both noble Baronesses, and would be happy to meet them to discuss these issues in more detail as we get closer to the implementation phase. In the mean time, noble Lords can feel assured that much is already being done across the board to help consumers. I would ask the noble Baronesses to withdraw their amendments.