Examination of Witnesses (Questions 20-39)|
11 NOVEMBER 2008
Q20 Mr Binley: I would be most grateful.
Mr Mayo: I think you can take
some comfort from the fact that there has been a good deal of
attention across public services at improving the cost-effectiveness
and the performance and the experience of users in relation to
public sector call centres, so there has been a very strong focus
on that. There are good benchmarks in terms of the efficiency
there. Consumer Direct, I believe I am right in saying, comes
out quite acceptably on that, but I will follow up with colleagues
at the Office of Fair Trading to get you an answer on that.
Q21 Mr Binley: You have talked about
skills and mapping those skills. How are you doing that? How are
you making sure that you are covering it in more detail? That
is a pretty important part of the set up procedures, is it not?
Mr Mayo: In terms of designing
the new organisation, we have looked at the core competencies
that we need in order to be able to carry out our work. It is
a unique privilege in some ways designing a new organisation.
It is like setting the DNA of something that then really needs
to work over time. The National Consumer Council operated for
30 years, and energywatch and Postwatch for a shorter period,
so we have been quite careful in designing in the skills and competencies
that can reflect a very fast-moving consumer experience and consumer
market. If you look online, for example, things are moving incredibly
fast with the emergence of new consumer communities online and
therefore building in more of a capacity for online action.
Chairman: It is coming up to 11 o'clock,
so I would invite everyone to stand.
There followed two minutes' silence.
Chairman: Thank you very much.
Q22 Roger Berry: I have to say, like
the Chair I find the system somewhat confusing. I guess I voted
for it, so I should not, but I am slightly more worried about
consumers. The basic thing consumers want is advice. They want
support. They want a complaints procedure that they understand.
The first port of call is quite important. Let us take the postal
service. Your website suggests that a complaint in that case should
go to the postal provider, but then you go on to say that Consumer
Direct can also give advice and information. Do you want people
to go to the postal service provider or do you want them to go
to Consumer Direct?
Lord Whitty: I think you probably
have to go back to government and eventually Parliament's general
strategy on this. In the regulated areas providers are pretty
poor at dealing with complaints. We need to improve the way in
which they deal with complaints themselves. The regulator has
been given responsibilities for setting standards which they are
now enforcing via Postcom and via Ofgem. We want consumers to
be able to get better handling of complaints if they are going
to the provider. If they are unsatisfied with that or unsure who
to go to, then they go to Consumer Direct right across the board.
That is the port of call. In energy, the reality is they were
ringing the same call centre as dealt with energywatch's calls
to start with. There is a continuity there which is hidden by
the change of organisation. First: try your supplier if you know
who that is. If you do not know who your supplier is or you have
had no joy with them, then go to Consumer Direct.
Q23 Roger Berry: Has that advice,
for example, been made clear to organisations like the CABs?
Lord Whitty: Yes, we have had
very detailed discussions with the CABs and other bodies.
Q24 Roger Berry: They have been given
clear guidance on the direction in which inquiries or complaints
for advice should go.
Lord Whitty: Yes.
Q25 Roger Berry: I would be quite
interested to see the sort of advice given to CABs in terms of
Lord Whitty: Yes.
Q26 Roger Berry: The next question
is about Consumer Focus and Consumer Direct. Understandably, you
have made the distinction of the responsibilities and who is responsible
for Consumer Direct. Is there not a problem here? Do you not think
it would have been better if Consumer Focus had had the responsibility
for the Consumer Direct service rather than it being a completely
Lord Whitty: It could be argued,
but Government and Parliament took a different view. We are here
to defend and advance the cause of Consumer Focus. You could have
designed the totality differently, but of course Consumer Direct
already existed prior to the legislation as a service run by OFT
on behalf of consumers generally and there was no appetite for
shifting that out of OFT's remit on to another body. For us, there
are some benefits, certainly at this stage of our existence, in
focusing on advocacy, campaigning, policy, and dealing with government
and business. In those areas there are benefits which maybe you
would want to subject to review further down the line, and there
are bits which are still with OFT and central government, including
Consumer Direct, including consumer education, which perhaps at
a later stage you might want to look at again. But the rationale
was not ours, it was what Government and Parliament delivered
Q27 Roger Berry: A phrase about Consumer
Focus sitting behind Consumer Direct was used earlier. What does
Lord Whitty: That was in relation
to our role in dealing with individual complaints, urgent and
vulnerable consumer complaints. If they are not resolved at the
first line and not resolved by the company then we have an obligation
and a remit there. That is in relation to complaints. It is not
hiding behind or sitting behind Consumer Direct in general. We
are a very upfront organisation.
Q28 Roger Berry: Lord Whitty, during
the second reading debate in the Lords, in relation to the energy
sector you said, "The existing ombudsman system in the energy
sector is not up to scratch for the job that is envisaged in this
approach." Indeed, you made comments earlier in a similar
vein. Do you believe that the Energy Ombudsman is up to scratch
to carry out the task?
Lord Whitty: The Ombudsman, as
I recall, was rather upset by my remarks in that respect. She
got quite stroppy with me. The point I would make is two-fold.
At that point the only scope for the Ombudsman related to billing,
whereas complaints about energy companies can range from connections
to repairs, to meter readings and so on. That was not then covered
by the voluntary ombudsman service. The statutory ombudsman service
covers everything. My other complaint was that it took rather
a long time for complaints to be dealt with by the Ombudsman.
I think a regulatory intervention has reduced that time somewhat.
I think it could probably do with a further reduction, but the
maximum now is eight weeks whereas at that time it was three months.
There were a number of failings of the Ombudsman. The regulatory
framework has changed.
Q29 Roger Berry: Can I take you to
the Extra Help Unit. As I understand it that, amongst other things,
will accept complaints from MPs. This obviously raises the question:
Is it widely known? Unless we keep it a secret, does this not
mean that anybody who has a serious concern or complaint will
go straight to their MP because they will send it straight to
the Extra Help Unit, and we will be in the ridiculous situation
that we have had with the CSA: "No reply unless you contact
your MP," and with tax credit problems. We of course as Members
of Parliament wish to serve our constituencies at any conceivable
occasion, but we all know that we spend hours and hours every
week as sort of postal workers, passing on complaints from constituents
to the relevant body, because they believe and we know that we
will get the reply and they will not. This Extra Help Unit worries
me in that respect. Is that not the obvious way?
Lord Whitty: Here we were thinking
we were doing you a favour.
Q30 Roger Berry: I am sure you were.
Lord Whitty: We were trying to
preserve the fact that prior to the change you were able to get
straight into energywatch and their backup complaints handling
servicenot their frontline but their backup. We did not
want to take that away from you. The situation has not changed
with regard to that, therefore. If you and other Members of Parliament
start getting more work, then there is something going wrong with
the system, so we need to know about that. If that does start
to happen, then OFT and ourselves need to address that.
Q31 Roger Berry: I understand and
appreciate the need for organisations to be encouraged to respond
to MPs inquiries quickly, but are you not concerned that evidence
from elsewhereand the CSA is a classic of courseis
that if the system is run so badly that people realise that going
to their MP is the only way to get a reply, then this will increasingly
happen. Will you be observing that experience and taking appropriate
action if that turns out to be the case?
Lord Whitty: We will indeed, because
it is not only an increase in work rate for you, it will also
be an increase in the work rate of the Extra Help Unit. If it
gets serious, we will have to pick that up. As I say, it is the
totality of the system which will need addressing in those circumstances.
It is not that the consumer does not have somewhere else to goin
this case, they have Consumer Direct to go to, they have Consumer
Direct's sign pointing them into the provider companies. I do
not anticipate that this will happen, but if it does happen then
we and OFT will have to address it. I also emphasise that what
we are proposing is no different from what existed with Energywatch
prior to the change.
Q32 Roger Berry: For small businesses,
a large proportion of their complaints are about energy issues.
The Federation of Small Businesses have expressed concerns about
the new arrangements, as you know. They feel that the advice and
support being offered under the new regime is such that it is
only offering a limited service to small firms. Have they misunderstood
the new procedures in saying that?
Lord Whitty: We are primarily
a body which is focusing on the individual consumer, however we
do recognise that a number of businesses, what I would describe
as the vast majority of businesses, micro businesses, suffer some
of the same difficulties in relation to the energy sector and
in many cases the postal sector that an individual does. In those
circumstances, in policy terms and in Consumer Direct and in the
Extra Help Unit we would look in terms of complaint handling at
treating micro enterprises roughly the same as individuals. There
is a different issue relating to the somewhat larger firms. We
are not primarily an organisation which looks after the interests
of small business, medium size business or large business, though
some of their problems are exactly the same as those of the general
consumer. In terms of micro businesses, Ed may want to say something
about the piece of research on their consumer concerns that we
have started to do already.
Mr Mayo: In brief, what you have
outlined in terms of the small business experience of the energy
sector is also amplified across other sectors. Once we start to
look across the piece, which is something that we could do, a
pattern emerges where particularly the smallest businesses may
be losing out as consumers of services from other businesses.
We have launched as part of the research workit was the
first piece of research that we launcheda study to look
across the piece at the consumer experience of micro-enterprise.
I think that is a unique studythat has not been done before,
although there is experience in energy and in post. We are going
to look at that to see what we can find. There may be interesting
issues for you as a Committee to look at, such as whether there
is greater consumer protection for individuals than there is sometimes
for micro-enterprise. Would it be good to stimulate enterprise
development if there was better protection for micro-enterprise
in relation to some of these services; for example, in a rural
setting, where some of these things are compounded? We are interested
in trying to use the fact that we are a joined-up organisation
across the piece to have a wider look. In that, we are collaborating
very closely with the Federation of Small Businesses, the Chambers
of Commerce and some of the other very effective small business
representatives that are out there.
Q33 Roger Berry: That is very helpful
but the specific point the FSB have made is that something like
30,000 calls have to be made each year to energywatch from small
businesses and with the new set up they are obviously concerned
that the kind of service that used to be provided to these 30,000
calls will not be met. Are they right to assume that, or do they
have it wrong? Do you have the capacity to provide the kind of
response to small businesses that has been provided in the past?
Mr Mayo: I would argue that they
are wrong but I think that plane needs to be tested against the
evidence. It is still very early days. I would argue that the
treatment for businesses ought to get better because of, first,
the ombudsman scheme. energywatch could never get a company to
do something, they could only charm their way in by going in at
a higher level than individuals or businesses could go into. The
ombudsman scheme has now been opened out to small business, which
gives them much greater rights in terms of that. Consumer Direct
is handling business inquiriesalthough it is an important
point to make sure that is promoted and understood. The Extra
Help Unit that we talked about earlier for vulnerable consumers
absolutely applies to vulnerable business consumers as well. I
am confident that the new system should be delivering a better
deal for small businesses but we will want to review what we are
doing to make sure that happens.
Q34 Chairman: Could I just check
one thing. You are still legally the National Consumer Council.
That is your legal name.
Mr Mayo: That is our statutory
Q35 Chairman: You chose to be called
Consumer Focus. That is your choice.
Mr Mayo: Yes.
Chairman: I think it is slightly difficult
for people who are not experts to try to understand the difference
between Consumer Focus and Consumer Direct. I think the names
are bewilderingly similar myself. But that is personal observation
which colleagues might not share. Those who are not experts might
find it difficult to understand the distinction.
Q36 Mr Weir: In your forward work
programme you make the point that in a time of economic uncertainty
there is urgent work to be done. Both of you this morning have
emphasised several times that your role is mainly in advocacy.
Can you tell us a bit more of the role you see Consumer Focus
playing during the current economic slowdown to ease the effects
Mr Mayo: One of the first things
we did when we started was to organise a round table of consumer
organisations and advice organisations and credit unions and others,
to have a look at responses to the current financial turmoil and
the contagion that was there. Coming on from that, we looked at
the particular context of the Lloyds TSB HBOS merger and the consumer
interest in relation to that. That is something that obviously
the Office of Fair Trading has made an input to and it has been
discussed in Parliament but we came forward with what was quite
a creative set of ideas about what might service consumer interests
better if that merger goes ahead and competition rules are waived.
For example, we have arguedand we will take this case to
the Lloyds TSB on a voluntary basis because competition authorities
are not able to make this happenthat the Lloyds TSB and
HBOS, if that merger goes aheadand that is in the news
at the moment of courseshould be selling off branches to
its competitors rather than just closing down branches, because
it would reduce competition at a local level quite considerably
if you have two of those banks now coming down to one or three
with a third coming down to two. We think of campaigners pointing
to problems and chasing down problems but we can also come up
with solutions in that area as well. You will also be aware from
the work that you have done that we have a very strong interest
in energy prices. We are launching the next phase of our campaign
to break down energy prices with the Daily Mirror tomorrow.
We will do all we can to encourage a public setting in which at
least one of the companies can break ranks and bring retail prices
down in line with the reductions that we have seen in the wholesale
market. These kinds of changes, if successful, can put money in
people's pockets and make sure that they are better served by
essential services over time.
Q37 Mr Weir: One of my colleagues
was asking more about energy and I have some questions about Lloyds
TSB, but, before we go on to that, I was interested in what you
say about your meeting with credit unions and other consumer bodies.
Presumably there will be increased pressure on many of these bodies
during an economic slowdown of people seeking help. Can you give
them any direct help in dealing with people who come to them with
financial problems during the recession period?
Mr Mayo: We will work very closely
with the face to face advice agencies but without in any way duplicating
their work. We have an expertise, particularly around the energy
side and the postal side, and so we have developed an advisor
service of volunteers in advice bureaux and the like to be able
to email through questions and get a response. We have developed
that on the basis of a structured survey of advice agencies' needs.
We will support them very closely in that, but we will not duplicate
the workparticularly that of the money advice sector, which
across the UK that provides an essential service. It is a service
that needs resources to be able to support people. That is the
frontline service, if you like, for consumers with money problems
or household budgeting problems.
Q38 Mr Weir: Moving on to Lloyds
TSB, your letter to Lord Mandelson raised certain issues relating
to that. Obviously Lloyds HBOS, if the merger goes ahead, will
have a considerable share of the market; for example, 30% of the
market in mortgages. Do you not feel that allowing anybody to
have such a large stake in the market at this stage, irrespective
of the particular circumstances that led to this, is going to
make it more difficult in the future to prevent other banks increasing
their stake in the market?
Mr Mayo: Yes. It is our job to
be sceptics on behalf of consumers. We do not like to see potential
players that may be dominant in the market. We do understand the
urgent circumstances and the need to act to secure the credit
and financial system. I do not think it was for us to stand up
and oppose the merger but I think it was for us to say that there
are long-run consumer issues here that require strong regulatory
scrutiny. Therefore, when we called on the Office of Fair Trading,
as we have done, to launch an ongoing investigation into the mortgage
market, as they have been running a personal account market, that
was in order that the authorities could be ready to act if there
was any evidence of abuse, because otherwise their system takes
a long time to deal with these problems.
Q39 Mr Weir: I appreciate that but
by doing this are you not saying that 30% of the market is acceptable
and not damaging interests of consumers by allowing this to go
Lord Whitty: No. The reason we
have asked the OFT to have an ongoing monitoring of this situation
is that, normally, in almost all circumstances, 30% of the mortgage
market, 30% of the retail banking market, is not in the best interests
of the consumers. We need to maximise competition, not to limit
it. The issues in the Government's judgment and to a large extent
the financial sector's judgment was that the alternative was for
HBOS to go under. If HBOS went under, then clearly not only the
depositors and account holders in HBOS would suffer severe consumer
detriment but competition would have been lost by that reason.
In emergency circumstances, we did not oppose the merger but we
made it very clear that this is not a normal circumstance and
that we would want the implications of that merger to be continuously
and effectively monitored by the authorities.