How can the consumer voice be heard in the regulated sectors? (1)
This morning, I was a speaker at a breakfast seminar organised by the Westbourne Communications agency in central London. The snappy title of the session was “Stakeholder Challenge And Influence: Lessons For The Utilities Industry”. I was invited in my capacity as the Chair of the Customer Challenge Group at South East Water to talk about different consumer models in the regulated utilities. I reproduce below my speaking notes:
We are discussing sectors of the economy subject to economic regulation.
Key characteristics of such sectors:
1) Services fundamental to civilised society
2) Networks requiring massive investments
3) Customer choice limited or non-existent
Regulation is complicated and involves trade-offs, but:
– The Interests of customers must be at the heart of regulatory decision-making
– The customer voice must be heard in the regulatory debates
Three models for providing institutional customer voice in sectors subject to economic regulation
1) Body within the regulator – Communications Consumer Panel in Ofcom, Customer Advisory Panel in Ofwat, Consumer Challenge Group in Ofgem
2) Body outside the regulator – former Postwatch and Energywatch, which were merged to form Consumer Focus and are now a unit in Citizens Advice called Consumer Futures, CCWater, Passenger Focus
3) Body within the regulated company – Customer Challenge Groups in the 18 water and sewage companies in England & Wales, External Advisory Board in EE
I am very familiar with all three models:
1) Body within the regulator – I was Member for England on Communications Consumer Panel for eight and a half years
2) 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
3) Body within the regulated company – I have chaired the Customer Challenge Group for South East Water for two year and I have been a member of the External Advisory Board of EE since it was set up a year ago
Each model has its strengths and weaknesses.
1) Body within the regulator
Advantage: can influence regulator early and without public change of positioning
Disadvantage: suggestion of lack of independence but this is more perception than reality
Problem: how to ensure strong links with other consumer bodies and voices
2) Body outside regulator
Advantages: seen to be independent and easier to obtain public profile
Disadvantage: can be seen as overly critical of regulator or companies but usually not the case
Problem: adequate powers and resources
3) Body within the regulated company
Advantage: such embedding allows detailed knowledge and frank conversations
Disadvantages: perceived lack of independence and danger of capture
Problem: seniors managers and boards find challenge uncomfortable
Since each model has its strengths and weaknesses, in my view, best approach is a combination with clear definitions of roles and proper resourcing.
Finally, none of this models can be excuse for companies not engaging with their customers systematically, continually and meaningfully:
– Complaint handling and resolution
– Qualitative research
– Quantitative research
– Focus groups
– Social media
April 15th, 2014 at 11:40 pm
People might say you are an idealist – do you think of yourself that way Roger?
Cheers
Nadine
April 16th, 2014 at 10:43 am
An idealist? No. An optimist? Certainly.
I think the world can be made a better place.
Roger
April 18th, 2014 at 8:17 am
Have you read “The Rational Optimist” by Matt Ridley?
“Original, clever and controversial…” (The Guardian).
April 18th, 2014 at 11:23 am
It looks good, but I have not read it. So many books, so little time …