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


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