MPs call for clampdown on financial and utility companies ‘exploiting’ consumers

Ofwat, Ofgem, Ofcom and the Financial Conduct Authority (FCA) should work together to help vulnerable customers who cannot afford essential services. 

The regulators of essential household services must work together to do more to stop vulnerable consumers from being exploited, a government watchdog says.

The Public Accounts Committee (PAC) says that consumers are facing difficulty accessing the water, energy, telecoms, and financial services that they are paying for.

In particular, vulnerable customers are having problems with debt, complex bills, and switching.

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The PAC says that Ofwat, Ofgem, Ofcom and the Financial Conduct Authority (FCA) have not made enough progress in working together to improve services for consumers.

Regulators have assumed that competition will lead to the best outcomes for consumers, according to the PAC.

The committee says the regulators need to do more to ensure that competition leads to better services rather than consumers being exploited.

In 2017, UK households spent a total of around £140 billion purchasing these services, mostly from private companies.

The report points out that many consumers struggle to afford all of their essential services, and often owe debts to more than one service provider at a time.

Rising utility prices, including a 37% real-terms rise in electricity prices since 2007, have put further pressure on affordability, while Ofwat estimates that over the next five years the number of households receiving assistance to pay their water bill will nearly double.

Elderly consumers, those who are less well-off and those who do not use the internet are also least likely to switch provider to access the best deals, while estimates suggest that people who do not switch their energy, telecoms and financial services providers could be overpaying by up to £1,000 a year.

Committee chairwoman Meg Hillier says: “Consumers – disproportionately vulnerable ones – can face serious problems in accessing essential services such as water, energy, communications and finance.

“Issues including debt problems, struggling to access the best deals, and seemingly impenetrable bills can significantly impact people’s daily lives. 

“The primary role of regulators is to protect consumers from such issues. The main regulators of these sectors, however, too often take inconsistent approaches. They need to be clearer about what they are trying to achieve for consumers and the common solutions they can bring.

“Regulators must work closer together with the best interest of consumers at their heart. They must ensure that competition leads to more choice, better services and prevent consumers from being exploited by suppliers.”

An Ofgem spokesman says: “We welcome the challenge set by the PAC for Ofgem, Ofcom, Ofwat and the FCA to build on the progress we have made in working more closely together and to address policy and legislative barriers to protecting consumers. Ofgem looks forward to updating the PAC on our progress.”

This article was first written and publish by our sister magazine Moneywise.

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