FIGURE 2 The circle of accountability
through the regulatory cycle
Regulatory Objectives
61. However, to what extent can the consumer
bodies claim to be representative of consumers? They are not
chosen directly by consumers but instead are appointed by the
regulator or a minister. In their evidence to us, the officers
of the different bodies explained the extent to which they relied
on open meetings and surveys of consumers. Ms Deirdre Hutton,
Chair of the National Consumer Council, told us that the NCC "did
not represent consumers, we are not a democratic body and representation
of consumers in that sense is for those who are democratically
elected". She then told us that "what we endeavour
to do through qualitative and quantitative research and through
policy analysis is to understand what the interests of consumers
are", finally observing that "since everything we say
is public, people soon let us know if they disagree". The
NCC, which does not exist to cover a particular regulator, stands
in a distinct position. Ms Hutton told us that the NCC does not
represent consumers. Even so, when asked how she knew whether
the Council was accountable, replied: "We do a lot of consultation".[30]
62. The Consumers' Association told us that it
is "an independent, not-for-profit consumer organisation
that is entirely independent of government and industry",
and that it has "worked on behalf of consumers to achieve
improvements in the quality and standards of goods and services
for more than 40 years".[31]
63. Maurice Terry, the Chairman of WaterVoice,
told us that openness was their way of being accessible, so
that "all our committee meetings are held in public,
and some of our regional committees have listening sessions, where
they invite members of the public to contribute".[32]
64. The work of the independent consumer bodies
in seeking to ensure that they can claim to speak authoritatively
for the consumer is commendable. However, we are struck by the
fact that each body is left to decide for itself what is the most
appropriate mechanism for discerning the interests of consumers.
There appears to be no common framework. In its response to
the Better Regulation Task Force's report on independent regulators,
the Government said that it "wholeheartedly agrees that there
is scope for improving the performance of 'the rest' to bring
them closer to 'the best'".[33]
The same point we believe is appropriate in the context of the
consumer bodies.
65. We were also concerned by the fact that engaging
in surveys can be a significant drain on resources. The bodies
are not generously resourced - they are small units, especially
relative to the offices of the regulators - and are constrained
in undertaking the type of consultation that they think is necessary.
We believe that both problems must be addressed. There needs
to be greater consistency in approach. There is little point in
creating a consumer body that can match the resources of the regulator,
but we recognise that consumer bodies need adequate funding.[34]
66. On our second area of concern - the clarity
of the relationship between consumer bodies and the regulators
- we found that the potential for conflict between bodies claiming
to promote the interests of consumers was variously fulfilled.
The evidence presented to us suggests that relationships can
be troublesome. We were struck by the poor relationship that
exists between Postcomm and Postwatch. Postwatch was critical
of the lack of co-operation on the part of Postcomm, believing
that it failed to be as transparent as it should be in its dealings
with Postwatch.[35]
Postcomm considered that Postwatch was ill informed in its approach.[36]
The extent of the poor relationship was noted by the chief executive
of Royal Mail: "I think Postwatch's position is quite clear.
They believe that there should only be one regulator and it should
be Postwatch. The fact that we have two bodies which have some
overlapping duties towards consumers has resulted in, from our
perception, the two bodies almost trying to outdo each other in
their degree of toughness in standing up to each other and ourselves,
which I think has damaged our relationship with both of them.
I have always thought it far more likely that one of our regulators
would judicially review the other before we would ever judicially
review either of them. I think it has been a recipe for disaster".[37]
67. The Electricity Association was equally concerned
with respect to Energywatch.[38]
Clare Spottiswoode also noted the inherent tensions;[39]
Professor Littlechild drew attention to how difficult it was to
reconcile the giving of a primary duty of consumer protection
to the regulators "with the simultaneous creation of an independent
consumer body whose duty is also to promote the interests of consumers".[40]
68. Poor relationships are not constant features.
Ofcom, which has been established with a consumer panel, as with
the FSA, appeared to have no concern about the independence of
its operations.[41]
Relations thus differ from sector to sector. This may reflect
the personnel involved or it may reflect the different methods
of appointment and structures created for each sector. The existence
of poor relationships, at times verging on the adversarial, is
clearly undesirable and needs addressing. A robust relationship
need not necessarily equate to a poor relationship. Ms Hutton
of the NCC told us that the Council had achieved change through
criticising Government where necessary: "In general terms,
governments of all colours have appreciated that the value of
the National Consumer Council to them lies in its independence
and its robustness of thought".[42]
A similar relationship between independent consumer bodies
and the regulators is desirable.
69. In order to address the problems we have
identified, we recommend that independent consumer bodies be obliged
by statute to engage in open meetings and conduct regular surveys
of consumers. This has resource implications which should be
met out of public funds. Following a review of the budgetary arrangements
for each regulator an appropriate formula should be agreed for
calculating this provision and applied to each of these bodies.
We believe that these changes will enhance both the accountability
and the independence of the consumer bodies.
70. We are aware that the Government is undertaking
a review of consumer bodies, supported by the National Audit Office
(NAO), and recommend that the review includes an examination of
the relationship between regulators and the related consumer bodies
in order to introduce greater clarity in the relationship, if
necessary through a statutory provision common to the regulatory
regime.
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