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Consumer requirements of regulators

19.08.2020

Introduction


Source
: UK National Consumer Federation.

In the United Kingdom in 2018, the U.K. National Consumer Federation (2018) published the Consumer Charter for Regulators which is reproduced below. It summarizes a set of key points, which can be useful for high-level self-assessment, or more broadly for identifying areas for change within a country. The document was produced by three major consumer organizations in the United Kingdom – Consumer Focus, Which?, and the National Consumer Federation – in consultation with many smaller consumer organizations and interested individual consumers. A consumer congress dedicated to the topic was an important stage in developing the charter.

A major study in 2009 (Brooker and Taylor 2009), carried out by the consumer organization Consumer Focus, provided a detailed assessment framework to rate the performance of several U.K. regulators. A version of its summary tables is provided below. Regulators elsewhere could use it for assessment of their own and other regulators’ performance in relation to consumers, helping them to identify priorities for improvement.

Both initiatives were originated by consumer organizations with consumer benefit in mind. However, because the ideas of “consumer” and “citizen” largely overlap, in fact both have broader application to stakeholder relations, good management and good governance.

Consumer charter for regulators

The main purpose of regulation is to promote and protect the interests of consumers in sectors where market forces alone would not deliver the best outcome. An effective regulator will:

Put consumer interests at the heart of what regulators do through…

Understand what a good outcome looks like for all consumers and deliver it, including…

Be an alert watchdog and act swiftly on behalf of consumers by…

Be transparent and accountable to consumers through…

Consumer framework for assessing regulators

As mentioned above, an adapted summary table of the major study Rating Regulators (Brooker and Taylor 2009) is reproduced below. Regulators elsewhere could use it for assessment of their own and other regulators’ performance on stakeholder relations, helping them to identify priorities for improvement.

Indicator Symptoms
Legal Framework
Statutory objectives and duties enable the regulator to adequately promote the interests of all consumers
  • clear objectives to further the interests of consumers
  • consumer objectives are prioritised
  • a broadly defined duty related to consumers in a position of vulnerability
  • duties related to working methods, e.g. governance, consultation, transparency
Responsibilities between different actors are clearly defined, without gaps or overlaps
  • each actor has clearly defined responsibilities
  • no obvious gaps in coverage on policy issues or relevant regulatory functions
Structures are sensitive to decentralisation
  • a physical presence in areas with decentralized powers,

e.g. through offices or advisory committees

  • governance structures contains representatives from areas with decentralised powers
  • the quality of links with consumer stakeholders in areas with decentralised powers
  • evidence of projects targeted at the needs of consumers in areas with decentralised powers
  • annual report contains a section on the regulator’s activities in areas with decentralised powers
  • evidence of consumer research conducted in areas with decentralised powers
The right tools for the job
  • a suitable range of powers to achieve compliance
  • absence of inappropriate restrictions, e.g. limitations on the disclosure regime
Culture and accountability
Translates statutory objectives into consumer- focused priorities and values
  • the consumer interest is central to mission statements, corporate values, etc
  • consumer-focused tone of language in corporate documents, speeches, etc
Embeds a consumer focus across all levels of the organisation
  • board membership includes consumer expertise
  • there is a dedicated point of expertise on consumer issues within the organisation
  • there are mechanisms in place that allow staff at all levels to understand the consumer interest
  • stakeholders are confident that there is a strong consumer focus throughout the regulator
Transparent about its activities
  • key information about working methods, decisions and performance is available on the regulator’s website:
  • board minutes (market-sensitive information excepted)
  • board papers (market-sensitive information excepted)
  • performance data against work plan
  • consultation responses
  • senior staff names
  • internal complaints procedure
  • freedom of information disclosure log
  • holds annual public meeting or similar
Accessible to the general public, including disabled users
  • use of plain language on website and in consultation documents, etc
  • use of innovative techniques, e.g. blogs, to help the public understand its work
  • website incorporates accessibility features for disabled users:
  • access keys
  • variable text size
  • colour options
  • screen-reader compatible webpages
  • screen-reader compatible downloadable documents
  • plain language versions of consultation documents
State of readiness
Identifies likely sources of consumer detriment, both now and in the future, which shapes work priorities
  • gathers intelligence from a wide range of sources
  • consumer projects feature prominently in work plans
  • stakeholders are confident that the regulator is well-informed about consumer needs
Uses effective mechanisms to understand the consumer perspective and translate this into sound decisions
  • good level of investment in consumer research
  • uses a mix of consumer research techniques, showing evidence of innovation
  • appreciates the potential subtleties of the consumer interest and has methodologies to resolve trade-offs
  • uses behavioural economics to inform its understanding of consumer behaviour
  • adopts an analytical framework for translating consumer insight into sound policy decisions
Works effectively with others, including with consumer organisations
  • has effective mechanisms to seek the views of expert consumer representatives
  • stakeholders report mature relationships and ongoing dialogue at each key stage in the policy-making process
  • actively engages hard-to-reach groups
  • partnership projects
Influences the wider regulatory agenda
  • has a ‘wish list’ for future legislation, proactively seeking change when existing mechanisms are deficient
  • considers the needs of future as well as existing consumers, including sustainable consumption implications where relevant
  • participates actively in international initiatives
  • periodically reviews future regulatory needs
State of action
Empowers consumers to help achieve regulatory outcomes
  • evidence of initiatives that seek to harness consumer power, such as consumer education, facilitating switching, disclosing firm-specific performance information
Has effective incentives to encourage compliance with its rules
  • an effective incentives regime, including evidence of innovation
  • stakeholders have confidence in this aspect of the regulator’s performance
  • consistently high rates of compliance or evidence of improved rates of compliance
Chooses the appropriate regulatory approach in the circumstances, and intervenes in a timely fashion when needed
  • proactive and fleet of foot in response to external events
  • stakeholders have confidence in this aspect of the regulator’s performance based on recent events
  • use of a mix of regulatory approaches
Gives priority to, and intervenes effectively on behalf of, consumers who are vulnerable
  • work plan has sufficient emphasis on vulnerable consumers
  • good understanding of concepts of vulnerability
  • meets good practice criteria developed with organisations that represent vulnerable consumers:
  • conducts consumer research specifically with consumers who are vulnerable
  • effective engagement with representative groups
  • accounts for its activities to protect consumers who are vulnerable in the annual report
  • website contains accessibility features (see earlier section)
  • trains staff on dealing with particular groups of consumers
  • educates business so they are sensitive to the needs of consumers who are vulnerable
  • willing to intervene when the market doesn’t deliver
Uses enforcement tools when necessary to protect consumers
  • imposes tough penalties when required
  • previous non-compliance is not repeated
  • uses alternative enforcement approaches when these benefit consumers, e.g. restorative justice
Impact and learning
Defines and measures its impact on consumers in terms of outcomes
  • organisational and project objectives are outcome-focused
  • board and senior staff exhibit a strong focus on outcomes
  • performance is measured in terms of outcomes
  • uses tools to quantify impact of work on consumers
Evaluates its work and embeds learning
  • asks stakeholders for feedback
  • benchmarks performance internationally and against comparable regimes
  • carries out (independent) evaluations of major projects
  • knowledge management systems are present to ensure learning from above processes feeds into future practice and there is a continuity of learning

Source: Brooker and Taylor 2009.

References

Brooker, Steve and Anne Taylor. 2009. Rating Regulators. London: Consumer Focus https://webarchive.nationalarchives.gov.uk/20100303162807/http://www.consumerfocus.org.uk/assets/1/files/2009/06/10708_CF_Rating_Regulators_web.pdf.

National Consumer Federation. 2018. Consumer Charter for Regulators. London. https://www.nationalconsumer.org.uk/wp-content/uploads/2018/02/Consumer-Charter-for-Regulators-.pdf.

Last updated on: 06.10.2020