Further written evidence from Consumer
Focus Scotland
REGULATION
Consumer Focus is concerned that many of the hard-won
consumer protections enshrined in the current licensing system
will be lost in the move to reduce the legislative burden on Royal
Mail via the Postal Services Bill. Our concerns, in respect of
a discretionary ability by Ofcom to regulate, epitomised by the
word "may" several times in the Bill, as opposed to
a requirement ("must") on Ofcom to regulate, centre
on three issues: mail integrity, provision of information, and
consumer protections.
Mail Integrity
OFCOM should be required to impose essential
conditions on postal operators. Essential conditions guarantee
mail integrity: confidentiality, security, data protection etc
and as such are an absolute minimum requirement for an operator
providing a communication and/or logistics service.
Condition 8 of Royal Mail's licence currently stipulates
that all licensed operators comply with the Postcomm Code of Practice
on Protecting the Integrity of Mail. Furthermore, Article 5 of
the EU Postal Directive 97/67/EC stipulates "Each Member
State shall take steps to ensure that the universal
service provision meets the following requirements: It shall
offer a service guaranteeing compliance with the essential requirements
....."
Residential and business consumers require confidence
in the integrity of the postal system and postal operator. Leaving
it to Ofcom to determine whether these essential conditions should
be imposed on postal operators could lead to significant un-reported
detriment and a lack of confidence in the postal system.
Provision of information
Consumer Focus is also keen to ensure that important
licence obligations are replicated in a mandatory proposed authorisation
scheme. Two licence obligations of particular value are mail integrity
figures and delivery & collection exceptions which, under
Royal Mail's current licence, are provided to Consumer Focus and
Postcomm. This information is not made public and, as such, Consumer
Focus and Postcomm currently provide the only scrutiny in these
areas of potential serious consumer detriment. Going forward,
this information must be made available to the regulator, Ofcom,
and to Consumer Focus (or any successor consumer representative
organisation).
The Postcomm Code of Practice on Protecting the Integrity
of Mail currently requires operators to submit to Postcomm and
Consumer Focus reports which set out:
(a) the number of (or where precise numbers are
not known, reasonable estimates of the numbers of) Code Postal
Packets during the relevant year which were lost, stolen, damaged
or interfered with; and
(b) details of any trends, patterns or other
notable features (such as above average incident levels at certain
premises) in relation to the incidence of loss or theft of, damage
to, or interference with, Code Postal Packets.
All licensed operators must also submit, with each
report, a statement of the measures that they intend to take to
remedy any failure or patterns of failure to achieve mail integrity
objectives and to reduce the numbers of Code Postal Packets lost,
stolen, damaged or interfered with.
Condition 2 of Royal Mail's Licence requires the
reporting, to Postcomm and Consumer Focus, of information relating
to delivery & collection exceptions.
Consumer protection conditions
A consumer protection condition would cover: complaints
handling procedures; dispute resolution and redress schemes; and
publication of information about complaint numbers and complaint
handling.
The Bill as currently drafted suggests that Ofcom
may impose consumer protection conditions on postal operators
and may require reporting and publishing of complaint numbers,
processes and compliance with complaint handling standards. Ofcom
should be required to impose a consumer protection condition on
all postal operators providing either a universal service or a
service within the scope of the universal service, as under the
current system. (Set out in the Postal Services (Consumer Complaints
Handling Standards) Regulations 2008 and the Postal Services Regulated
Providers (Redress Scheme) Order 2008.)
Article 19 of Directive 2008/6/EC stipulates "Member
States shall ensure that transparent, simple and inexpensive
procedures are made available by all postal service providers
for dealing with postal users' complaints".
The existing licence and legislative consumer protections
ensure that consumers' key interests around an accountable and
high quality postal service are met. Without a mandatory consumer
condition, postal operators will be able to operate without sufficient
regard for consumers.
Postcomm's 2009 Customer Survey found that of the
8% of residents and 13% of SMEs who made a complaint to Royal
Mail, 73% of residents and 70% of SMEs were not satisfied with
the customer service received. These figures indicate the problems
consumers experience even with legal protection - this situation
is likely to deteriorate given the diminution of protection set
out in the Bill.
Postal consumers should be provided with at least
the same level of protection, in terms of the quality of providers'
own complaints handling schemes; access to Alternative Dispute
Resolution (ADR); and information about ADR, as Ofcom will require
from telecoms providers, as of July 2011. Postal operators should
also be required to be members of an approved redress scheme to
ensure complaints handling standards can be monitored and independently
investigated.
EXAMPLES FROM
OTHER MARKETS
The Committee asked if we were able to identify examples
where consumer detriment occurred or exists as a result of the
regulator not being required, although given discretionary ability,
to undertake certain actions.
Sectoral regulators and referrals to the Competition
Commission
Ofgem, Ofwat, Ofcom and the ORR all have competition
enforcement powers under the Competition Act 1998 and the Enterprise
Act 2002. In particular, these sectoral regulators have the power
to make market investigation references to the Competition Commission
as the statutory referral body (Section 136 of the Enterprise
Act 2002). The Government's 2001 White Paper "A World Class
Competition Regime" made no comment on the expected use of
these powers. However, Ofgem, Ofwat, Ofcom and the ORR have, in
total between them, made only one market investigation reference
to the Competition Commission since 2002 and there has never been
a market investigation into the energy sector.
In 2010 the National Audit Office carried out a review
of the UK's competition landscape and concluded that the Government
should evaluate the appropriateness of the incentives for regulators
to use their competition powers. In particular, they stated that
"Regulators are not making Market Investigation References
to the Competition Commission to the extent envisaged in the planning
assumptions" (National Audit Office, "Review of
the UK's Competition Landscape", March 2010).
Ofgem's removal and re-instatement of licence
conditions
Consumer Focus's experience as the energy watchdog
has led us to the conclusion that an over-confidence in the competitive
health of the energy market and its ability to self-police has
blighted the consumer experience. For example, in 2004 Ofgem scrapped
licence conditions banning undue discrimination between consumers
"in a bid to minimise regulatory burdens" (Ofgem
press release, "Improving consumer protection by reducing
the regulatory burden", July 2000).
Very similar licence conditions had to be re-introduced
in 2009 after Ofgem found there were persistent unjustified differentials
between the prices suppliers charged customers depending on their
payment method or region. Ofgem's assumption that consumer protections
should always be removed, never introduced, explains our finding
that in a study assessing consumers' perceptions of 45 markets
for products or services, energy scored worse than any other market
(Consumer Conditions Survey, December 2009).
Ofcom's duties around consumer protections
Under the Communications Act 2003, Ofcom has a duty
to establish and maintain procedures pertaining to complaint handling,
dispute resolution, redress and service standards. However, the
wording in the Act leaves the duty very diluted: "It shall
be the duty of Ofcom to set such general conditions (if any) as
they consider appropriate" in respect of consumer protections
(Section 52 of the Communications Act 2003). This relaxed duty
has led Ofcom to impose two regulatory conditions on communications
providers: that they must have and comply with a Complaints Code
of Practice approved by Ofcom and that they must belong to an
Ofcom-approved ADR scheme.
However, Ofcom recently announced that, as of next
year, it will be tightening up the regulations around consumer
protections. Its research on the existing complaints handling
and ADR schemes found that a significant number of consumers experience
poor complaint handling and that "providers incentives
to compete on the basis of customer service are not proving sufficient
to ensure that individuals will receive satisfactory treatment
from their provider when they try to pursue a complaint"
(Ofcom press release, "A Review of Consumer Complaints
Procedures", 2010).
Ofcom is therefore establishing minimum standards
for complaint handling procedures that will apply to all communications
providers ("The Ofcom Code") and is requiring communications
providers to provide extra information to consumers about their
rights regarding redress. Despite our reservations regarding the
wording of this duty this level of protection is still stronger
than that afforded to postal consumers under the Postal Services
Bill who do not even enjoy the limited consumer protections that
competition can bring.
CONSUMER FOCUS
POSTAL SERVICES—FUNDING
& STAFFING
The Postal Services funding stream allocation for
all work in Consumer Focus, Consumer Focus Wales, Consumer Focus
Scotland, Consumer Focus (Post) Northern Ireland is just over
£3 million in the current financial year (2010-11). Our funding
stream allocation for 2011-12 has yet to be confirmed. We currently
have 10 full-time equivalent posts, encompassing eight full-time
posts, dedicated to work in this area with a proportionate cost
allocated against this funding stream for other corporate support
functions.
SCOTTISH POSTAL
SERVICES CONSUMER
SURVEY (2010)
In our written evidence, and during the oral evidence
session, references were made to the views of Scottish consumers
in relation to the Postal Services market. The relevant report
is available on our website Scottish Postal Services Consumer
Survey (2010) together with the full research report (Consumer
Survey of Postal Service Users in Scotland Research Report) detailing
information on the geographic and demographic spread of those
surveyed, as requested by the Committee.
PARCEL DELIVERIES
IN SCOTLAND
The Committee requested any further information we
could provide in relation to the parcel delivery market, services
and consumer experience in Scotland. Our briefing paper Parcel
Deliveries: Current practice and possible solutions, produced
by Consumer Focus Scotland in July 2010, is available online.
VIEWS AND
EXPERIENCES OF
NON-USERS
OF POST
OFFICES
The majority of consumers use post office services
regularly: according to research undertaken in Summer 2006 by
our predecessor body, Postwatch, 81% use post offices each month,
and 55% use the post office at least once each week (The Future
of the UK's Rural and Deprived Urban PO Network). However, the
number of customers using post offices has steadily fallen, with
20 million customers visiting post offices each week, compared
to 24 million customers five years ago.
Usage (and non usage) of post offices is driven by
a number of factors, including:
¾ Opening
hours of post offices not being convenient for consumers;
¾ Increasing
queues in High Street branches;
¾ Local
post offices may have closed, or the nearest post office may be
some distance from where consumers live;
¾ Increasing
preference to undertake transactions online or over the phone;
¾ Services
that were previously offered at post offices have been withdrawn
and moved elsewhere e.g. the loss of the TV Licence contract;
¾ The
shift to Direct Payment, in 2004, means many people receive their
pensions and benefits into a bank account, as opposed to through
a post office.
The shift to new operating models means some customers
no longer use post office services as regularly, or have stopped
using post offices altogether. For example, our recent research
into Outreach services (Sink or swim: Post Office Outreach Services
in the Long-term) finds that many consumers do not or no longer
use the service because its opening hours do not meet their needs
(31%); it does not offer the products or services they wish to
use (9%); they have concerns regarding the reliability of the
service; they did not know the service existed (35%); or because
of other aspects of the customer experience, such as concerns
about the suitability of the premises and the privacy it offers.
Government has recently announced that 2,000 subpostoffices
will be converted into a new operating model, Post Office Local
(PO Local), in which post office services are provided as a secondary
retail offer from existing premises such as petrol stations, convenience
stores or corner shops. PO Locals typically offer a restricted
product offer.
Research recently conducted, for a forthcoming evaluation
report by Consumer Focus, in the areas where the operating model
is being piloted suggests that 22% of consumers do not use Post
Office Locals, even though it is the branch closest to them, for
a number of reasons which include:
| Reason for non-usage
| % |
| Not aware it existed | 21 |
| Does not offer services I need | 21
|
| Prefer to use a bigger branch | 17
|
| Not near where I work or shop | 13
|
| Do not like the branch | 12 |
Unless efforts are taken to ensure the PO Local model meets consumers'
needs as effectively as possible, Consumer Focus anticipates that
either a significant number of consumers will opt to use other
post office branches further away—or, more worryingly, consumers
may opt to undertake transactions through other means with this
business lost to the PO network altogether.
ACCESSIBILITY ISSUES
IN WHSMITH
FRANCHISE BRANCHES
The Committee requested any information we might have on accessibility
challenges faced by consumers where Post Offices were operating
in shared premises with the Post Office service located on floors
below or above the entrance floor.
WHSmith operate 78 franchise post offices, the majority of which
are located on the basement or first floor of High Street WHSmith
branches. The branches were introduced as part of a franchising
programme, which was designed to stem the losses generated by
the Crown Office network. Crown Office losses remain stubbornly
high at approx £60 million.
Consumer Focus recognises that the location of post office services
other than on the entrance floor presents issues in respect of
the accessibility of these branches for customers with disabilities,
who use wheelchairs or motorised wheelchairs, and for customers
with pushchairs. On that basis, our predecessor body, Postwatch,
investigated each proposal and secured agreement from POL on the
following measures to maintain reasonable access for consumers
using these branches:
¾ Maximum
two hour call out time in the event of a lift breaking down or
suffering technical failure;
¾ The
provision of a screenless post office counter, on the ground floor,
to provide access to post office services for customers who are
unable to use post office counters on other floors;
¾ Signage
in a prominent location which informs consumers of the option
to be served on the ground floor;
¾ Contingency
measures in the event the lift breaks down, including means to
offer post office services from a ground floor counter.
We would be pleased to investigate any concerns that
members of the Committee have in respect of accessibility problems
in a specific branch.
Any further conversions would be subject to the Code
of Practice, which is jointly operated by POL and Consumer Focus,
which requires the Post Office to consult on changes and demonstrably
take account of concerns expressed regarding the physical accessibility
of the premises (or any other issue pertinent to the branch re-location.)
Research undertaken for Consumer Focus (Post Office
Mystery Shopping Study; December 2009) finds that many branches
have benefitted from improvements such as ramps to ensure level
access, low level counter positions, lightweight and easy grip
doors, and the installation of hearing loops for consumers with
hearing difficulties.
The following table shows the availability of facilities
designed to improve the accessibility of the branch for disabled
customers, which is broadly comparable to the accessibility provided
in Crown branches:
| Facilities for disabled consumers
| % of branches available |
| Wide entrance | 84 |
| Flat entrance | 84 |
| Wide aisles and floor space | 63
|
| Automatic doors | 56 |
| Staffed low counter position | 51
|
| Conveniently placed door handles | 23
|
| Ramp installation | 18 |
| Hearing loops | 32 |
While we are satisfied WHSmith has taken reasonable measures to
make physical improvements to its branches, we remain concerned
that the layout of some of its branches may make it difficult
for consumers to reach post office counters. Some branches also
tend to leave stock on the shopfloor, before it is shelved or
put on display, which presents an additional challenge for consumers
attempting to navigate the branch to access PO services.
MAINTAINING, AND
CODIFYING, THE
NUMBER AND
DISTRIBUTION OF
POST OFFICES
There are currently 11,870 post offices in the UK, of which 1,441
(12%) are located in Scotland. Government has stated that it intends
to maintain the current number of post office branches but has
so far declined to put the access criteria that specify minimum
levels of coverage on a statutory footing.
Consumer Focus sees merit in the existing Government access criteria
for post office provision, which could presently be met with a
network of approximately 7,500 branches, being strengthened to
more closely reflect existing coverage, and being incorporated
into primary legislation.
If Royal Mail were required by primary legislation to use a minimum
number and distribution of postal service access points, POL would
be better placed to secure future mail related contracts and would
consequently represent an effective long-term safeguard for consumers.
Consumer Focus recognises that the demand for postal and post
office services may change over time. We therefore suggest that
the introduction of statutory access criteria, for both post office
services and mails services, should be subject to a review process
to be initiated by the Secretary of State and that any proposed
changes to the minimum level of provision should require parliamentary
approval.
16 December 2010
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