Why and how the customer needs to be heard in regulatory debates and decision-making
December 8th, 2015 by Roger Darlington
SPEAKING NOTES FOR “CUSTOMER ENGAGEMENT IN REGULATION” WORKSHOP ORGANISED BY THE CENTRE FOR ANALYSIS OF RISK & REGULATION AT THE LONDON SCHOOL OF ECONOMICS, 7 December 2015
Roger Darlington
Chair, Consumer Forum for Communications
WHY CUSTOMERS NEED AN INSTITUTIONAL VOICE IN REGULATED SECTORS
How do individual customers and companies engage with one another?
In all markets, there are at least six main methods:
- Marketing – the promotion of products and services
- Sales – one-off or subscription
- Complaints to companies – these start as negative but can be learnings for the company
- Public comments on social media or forums
- Qualitative research such as focus groups or citizen juries
- Quantitative research – but different questions, different sample sizes, and different timing can all influence result
All these are valuable forms of customer engagement which all companies and providers should be using.
In regulated markets, there are at least three further mechanisms:
- Often there is an ongoing relationship with regular billing that might be monthly, quarterly or yearly – but evidence suggests that customers only look very quickly at bills simply to confirm charges.
- Switching provider – but there are low levels of switching and, in some sectors, switching levels are actually falling.
- Engagement with regulatory debates and submissions to regulatory consultations– but this is very difficult for customers who have busy lives and lack knowledge of regulatory issues and even language.
Yet, in regulated markets, customers need strong engagement because:
- There is limited or no choice of provider.
- We are talking about an essential service that no home can do without.
- The sector has high costs because of heavy and long-term investment needs in infrastructure.
- There are complicated trade-offs to be made between different stakeholders.
So customers/consumers/citizens/users need a stronger voice than markets alone can provide and this needs to be an institutional voice in regulatory debates.
THE DIFFERENT MODELS FOR AN INSTITUTIONAL VOICE
There are three models for providing an institutional customer voice in sectors subject to economic regulation:
1) A body within the regulator – such as the Communications Consumer Panel in Ofcom, the Customer Panel in the Civil Aviation Authority, and the Customer Advisory Panel in Ofwat for Price Review 14
2) A body outside the regulator – such as the former Postwatch and former Energywatch which were merged to form Consumer Focus and then became a unit in Citizens Advice plus bodies like CCWater and Passenger Focus
3) A body within the regulated company – such as the Customer Challenge Groups in the 18 water and sewage companies in England & Wales and the External Advisory Board in mobile operator EE
I am very familiar with all three models:
- A body within the regulator – I was the Member for England on the Communications Consumer Panel for eight and a half years.
- A body outside the regulator – I was on the Council of Postwatch for its last three years and on the Board of Consumer Focus for its first three years.
- A body within the regulated company – I have chaired the Customer Challenge Group for South East Water for four years and I have been a member of the External Advisory Board of EE since it was set up two years ago.
In my view, each model has its strengths and weaknesses. So I believe that the best approach is a combination of all three with clear definitions of roles, close working of the parties, and proper resourcing for each body.
NEED FOR CROSS FERTILISATION OF THE CUSTOMER EXPERIENCE
Although each regulated sector has its own characteristics and complexities, there are some common features of all regulated markets. The regulators work together through the UK Regulators Network. Customer bodies similarly need to work together across sectors. Three relevant customer bodies are:
1) The Consumer Forum for Communications (which I chair) that covers telecommunications, broadcasting, spectrum, and posts
2) The New Public Interest Network that covers energy and water
3) The Essential Services Access Network that covers energy, water, communications and financial services
Some examples of the many cross-sector issues to be discussed are: access, take-up, price controls, affordability, vulnerability, switching levels, complaint handling, alternative dispute resolution procedures.
HOW DO CUSTOMER BODIES REACH THEIR VIEWS?
Like the regulators themselves, customer advocacy bodies need to be as evidence-based as possible. There are potentially many sources for evidence including the regulator’s research, the sector body’s research, the company’s research, complaints data, and research by customer bodies including all those already mentioned plus Citizens Advice, and Which?
BUT: all data has its limitations and many regulatory decisions do not lend themselves to customer research alone but require detailed knowledge and careful judgement.
Finally, we need to recognise the inevitability of trade-offs and make these as explicit and transparent as possible
- between different customer groups
- between present customers and future customers
- between customer and citizens
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Word of the day: meggings
December 7th, 2015 by Roger Darlington
At a social event this weekend, I was introduced to a word that was new to me: meggings. Apparently it means male leggings.
Women have leggings. Children have leggings. I suppose men could too. But, tell me guys, would you wear these?
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A review of the film “Big Eyes”
December 6th, 2015 by Roger Darlington
This film, directed by Tim Burton, tells the remarkable true story of American artists Walter and Margaret Keane. You can read my review here.
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Who won at Oldham? Jim or Jeremy?
December 5th, 2015 by Roger Darlington
In Thursday’s by-elcction at Oldham West and Royton, Labour not only confounded most expectations by winning comfortably, but it actually increased its share of the vote compared to the General Election from 54.8% to 62.1%. So whose victory was this? The popular and moderate leader of Oldham council Jim McMahon or the Labour Leader substantially elected in the first round Jeremy Corbyn?
It’s probably too soon to say.
It’s been a pretty good week for Corbyn. Roughly two thirds of the Parliamentary Party and 17 out of 28 voting members of the Shadow Cabinet supported him in his opposition to British air strikes in Syria. And Corbyn supporters will see the result in Oldham as confirmation that Labour can win elections – including the General Election – under his leadership.
But Oldham West and Royton was special. There was an immensely popular Labour candidate with high name recognition; the party was able to mobilise considerable resources that would not be available in a wider election; and almost a quarter of the votes cast were postal votes garnered largely from the loyal British Pakistani and British Bangladeshi communities.
In 2001, Labour won a by-election in the adjoining constituency of Oldham East and Saddleworth but, in the General Election of 2015, nationally it went down in flames. So it’s probably too soon to draw firm lessons from this week’s by-election.
Meanwhile Corbyn’s job ratings have fallen sharply since he won the Labour leadership in September. Compared to a net approval rating then of -8, it now stands at -41. The fight goes on …
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How to resolve conflict
December 4th, 2015 by Roger Darlington
Is there conflict in your personal or professional life. in your relationship, or group or organisation? This advice may help you.
Posted in My life & thoughts | Comments (0)
Whatever you think about bombing in Syria, you have to admire this speech by Hilary Benn
December 3rd, 2015 by Roger Darlington
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A review of the film “The Drop”
December 2nd, 2015 by Roger Darlington
You may not of heard of this film but, if you like crime thrillers that are more about character than violence, “The Drop” is worth seeking out. You can read my review here.
Posted in Cultural issues | Comments (0)
How the Government proposes to help consumers
December 1st, 2015 by Roger Darlington
Water. The government is driving water market competition. Business and other non- household customers will be able to switch suppliers from 2017. Ofwat will provide an assessment by summer 2016 of the costs and benefits of extending retail competition to household water customers. Following this, the government will work with water companies to begin the transition to household retail competition before the end of this Parliament.
Banking. The government will boost competition in banking with the establishment of a New Bank Start-Up Unit, making it easier for new banks to enter the market. It will also take steps to help consumers find the best bank for them. Switching can save the average customer £70 a year and heavy overdraft users £260 a year.
Broadband. Pricing in this market often lacks transparency. The Advertising Standards Authority (ASA) is looking at whether teaser rates on broadband deals are misleading consumers, and the government expects the ASA to take swift action to ensure that prices are made clearer and costs are not hidden. Total costs can be £240 a year higher than the headline introductory rate.
Legal services. The government will further reduce barriers so that it is easier for alternative business structures, such as supermarkets and estate agents, to offer legal services like conveyancing, probate and litigation in England and Wales.
Pharmacies. The government will examine the NHS community pharmacy market to ensure that the regulatory framework and payments system are efficient, encourage competition and innovation, and facilitate online, delivery to door and click and collect, pharmacy and prescription services. This will save time for working people.
Dentistry. Pricing for dentistry can be opaque and confusing. The government will ensure that dentist treatment plans and price lists are clear and easily accessible, empowering patients in England to make the best choices.
Motor insurance. The government intends to end the right to cash compensation for minor whiplash injuries, removing over £1billion from the cost of providing motor insurance, equivalent to an average of £40 to £50 saving for each motor insurance policy.
Energy. The government will reduce the projected cost of green policies on the average annual household energy bill by £30 from 2017. The government will also make switching supplier easier and quicker. The average household could currently save £160 from switching supplier.
Mobile phones. Consumers can face costs of up to £20 to unlock their phones with an estimated £48 million spent per year. The government expects industry to start automatically unlocking customers’ handsets at the end of their contracts, and will consult in 2016 on ending the practice of handset locking for customers outside any initial contract period.
School uniforms. The government will ensure that parents and carers get the best value deals on school uniforms in England. Analysis shows that parents and carers are significantly less likely to report financial hardship when schools allow them to purchase uniform from a variety of suppliers.
More information in this paper.
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Men are not from Mars and women are not from Venus
December 1st, 2015 by Roger Darlington
Instead each of us is from our own unique planet.
But what about that book? Ignore the fiction; look at the facts as demonstrated by the latest research based on MRI scans of men’s and women’s brains conducted at Tel Aviv University.
As the head of the project puts it:
“We show there are differences, but brains do not come in male and female forms. The differences you see are differences between averages. Each one of us is a unique mosaic.”
“Sex affects the brain but how it affects the brain depends on other factors. The effects of sex can be different and even opposite under different conditions. This is why you can be highly masculine on one feature but highly feminine on another feature,”
So, guys, celebrate your feminine side. And, gals, celebrate your masculine side. We’re really not so different.
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What’s the UK doing about Syria? – 11 key questions answered
November 30th, 2015 by Roger Darlington
Whether or not the UK should join bombing operations against ISIL in Syria is not a simple matter. There are strong arguments for and against and many considerations to weigh.
Usefully the BBC web site has provided a short guide to some of the key questions.
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