3 Vulnerable consumers
22. A vulnerable consumer is one who finds it more
difficult, to take advantage of a competitive market because of
their particular circumstances.[54]
A consumer may be vulnerable for a variety of reasons, for example
economic status, inability to access the internet, physical disability
or a lack of knowledge.[55]
Each of the regulators has their own definition and prevalence
of vulnerable consumers according to their particular sector.[56]
For example, in the energy market, Ofgem believe that in addition
to the four to five million people living in fuel poverty, there
are a further two or three million other vulnerable consumers.[57]
23. Different groups of vulnerable consumers have
contact with the market to differing degrees. For example, whereas
around half of all consumers have switched gas or electricity
supplier and 55% of single parent families have done so, only
40% of prepayment customers and 35% of people over the age of
65 had switched.[58]
24. Those on pre-payment meters tend to include consumers
on lower incomes and renters, and approximately 20% of the fuel
poor use pre-payment meters.[59]
Ofgem was concerned that the price differential between pre-payment
meters and standard credit terms had risen.[60]
Ofgem considered that there was an argument for a differential
for prepayment customers of about £80, but that had stretched
out to well above £100 and Ofgem was examining why that had
happened.[61]
25. A number of protections exist for vulnerable
consumers, for example particular conditions in supplier licences.[62]
Ofgem is also working with the Citizens Advice Bureau (CAB) to
make sure that CAB staff can advise their clients on how to get
the best deal on energy.[63]
26. In the postal industry, Postcomm must exercise
its functions in a manner that it considers is best calculated
to ensure the provision of a universal service.[64]
Postcomm has commissioned research into what customers (both domestic
and business) want from their postal service, and into the costs
of the different parts of the universal service obligation.[65]
At our hearing in the afternoon of 14 May we asked Postcomm about
alterations to the universal service.[66]
We were told that the two pieces of research commissioned by Postcomm
would be published 'shortly'.[67]
27. At 10 pm the same day, Postcomm announced that
it was making its second submission to the Independent Review
of the Postal Market the following day, when it also published
the two pieces of research on which we had questioned it on 14
May.[68] The submission
discussed the universal service at length, and included the suggestion
that it might be at risk unless more private capital was brought
in. We therefore recalled the Chief Executive of Postcomm on 30
June to question her on why she had not been franker with us in
our first evidence session.[69]
She told us that she had not thought it relevant to mention the
imminent publication, and had not thought it proper to use our
hearing to promote Postcomm's own views. She had thought she had
answered our question fully, but recognised her misjudgement,
and said that she had not intended any discourtesy.[70]
28. Postcomm's aim was to sustain a universal service,
which at the moment only Royal Mail was capable of providing.[71]
Both it and Royal Mail agreed that competition would be better
than regulation in securing customer interests and universal service,
and fair and sustainable competitive market would do away from
the need for the very interventionist regulation needed while
Royal Mail was a monopoly.[72]
If Royal Mail was not to become more efficient, there was an inevitable
tension between the price of stamps and the quality of service
and one of the aims of Postcomm's research had been to see how
people saw this tension.[73]
The research had made clear that delivering six days a week had
a cost but also that customers regarded it very highly. On that
basis Postcomm had determined that it would not recommend any
change to the six-day-a-week universal service.[74]
54 C&AG's Report, para 3.23 Back
55
Q 57 Back
56
C&AG's Report, para 4 Back
57
Qq 56-57 Back
58
Q 54 Back
59
C&AG's Report, para 3.27 Back
60
Q 60 Back
61
Qq 16, 60 Back
62
C&AG's Report, para 3.23 Back
63
Q 54 Back
64
C&AG's Report, Appendix 2, para 4 Back
65
Q 92 Back
66
Q 97 Back
67
Q 90 Back
68
Q 122, all three documents at www.psc.gov.uk Back
69
Qq 122, 139 Back
70
Qq 122, 127, 144 Back
71
Q 130 Back
72
Q 132 Back
73
Q 135 Back
74
Qq 137-138 Back
| 
