Public Accounts Committee

Consumer protection inquiry

Inquiry status: Concluded

Report published 12 July 2019. Government response published October 2019.

Scope of the inquiry

In 2017, UK households spent a total of around £140bn on water, energy, communications and financial services. These services are essential for security, well-being and social participation, however the characteristics of some markets mean they risk failing to produce behaviour or results in line with public interest. For instance, a lack of competition or consumer engagement can lead to higher prices and poor-quality services. Regulation is used to correct market failures and protect consumers, small business and the environment.

Each sector is overseen by a regulator to ensure that services are provided in a way that meets public policy objectives, who are directly accountable to Parliament:

1. Ofwat (water in England and Wales);

2. Ofgem (energy in the UK);

3. Ofcom (UK-wide communications); and

4. The Financial Conduct Authority (financial services UK-wide).

A recent National Audit Office (NAO) report found that consumers are facing significant issues across all four sectors. This includes: affordability concerns, which are compounded by real-terms price rises of 28% for gas, 37% for electricity and 6% for water since 2007; loyalty penalties for consumers who do not switch providers and end up paying more for the same service, with Citizen’s Advice estimating that this totals £4.1bn a year; and service failures across the sectors – for example, 36,000 homes were left without water supply for more than a day following the severe cold weather in 2018, and Ofcom found the most common cause of complaints was broadband connection problems.

The NAO report also highlights that regulators a) are not clear about the overall outcomes they want to achieve for consumers, b) do not use the consumer experience data they already collect to assess their own performance, and c) have improvements to make in how they communicate with consumers.

On 20 May, the Public Accounts Committee will question the Chief Executives of the four main regulators on the work they are doing to protect consumers. They will also investigate how regulators define the overall outcomes they want for consumers, as well as the action they take to assess their  own performance.

Latest evidence

Next meeting(s)

There are currently no public meetings scheduled.

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