Ofgem Must ‘Effectively Respond’ to Customer Concerns
An official report has criticised UK regulators, demanding that they do more to ‘effectively respond’ to consumer concerns. The criticism is aimed at all four of the UK’s industry regulators, including energy regulator Ofgem and water regulator Ofwat.
The report was published recently by the National Audit Office (NAO). They state that the UK’s regulators haven’t been specific enough when explaining what they ultimately want to achieve for consumers.
Regulators Must Define Intentions in ‘Practical Terms’
Head of the NAO, Amyas Morse, explained why the likes of Ofgem need to be more specific about their intentions: “Regulators need to do more to show the concrete results they are aiming to achieve for consumers.
“I understand that there is a difficult balance to be struck between long and short term outcomes, between the needs of businesses and the interests of consumers. But at present, the regulators’ results can come across as somewhat academic and detached from peoples’ practical concerns and pressures.”
Part of the criticism in the NAO report is aimed at the vague language used by regulators. Declarations mention aims like attaining ‘high quality, good value services’, but fail to outline exactly how this will be achieved.
Regulators Urged to Respond More Effectively to Consumer Problems
Frequent problems include consumers needing help with debts from paying bills and credit repayments. The report also highlights the problems consumers have accessing the best tariff. This in turn leads people to neglect switching supplier, often leaving them on the more expensive tariffs.
The NAO proposes that the regulators create a common set of standards for how they report on consumer outcomes. They should also share methods to measure issues that cut across multiple sectors, especially with regard to affordability and debt.
The regulators must also improve how they measure their own performances. The NAO believes this will help them understand what works well for their customers and what doesn’t.
Ofgem and Ofwat Agree with NAO Report
A spokesperson for the UK energy industry regulator, Ofgem, said:
“[We exist] to protect energy consumers, particularly those in vulnerable circumstances. We agree with the National Audit Office that regulators need to effectively measure their impact to help deliver the best possible outcomes for consumers.
“Ofgem has already made progress in this area. Last year for example we published our first Consumer Impact Report measuring how much our regulatory decisions were expected to benefit consumers and we also publish annual reports on the state of the energy market and on the situation of vulnerable consumers. We will keep working closely with other regulators to identify what further steps we can take to improve the way we measure our performance.”
A spokesperson for the water regulator, Ofwat, also agreed with the NAO in principal:
“The National Audit Office have found that we have a good understanding of customers and monitor their experiences effectively. Given how important it is for us to protect customers, it is great that they have identified it as a strength.
“The National Audit Office is challenging us to do more to track and demonstrate how we do this and we are already working on implementing their recommendations.”
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