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Government-funded regulatory bodies which police the providers of essential services such as water, energy and the financial services came under fire today for failing to step in quickly enough to help the consumers they were set up to help.
The regulators absorb millions of pounds of taxpayers' money, yet some are "dithering" and indecisive, according to the first major report from the newly-formed independent consumer champion Consumer Focus.
Rating regulators is the first investigation of its kind from the consumer perspective into the world of regulation. The report shines a light on six regulators who oversee the £290bn food, water, energy, money, communications and postal sectors, rating them against a series of benchmarks.
Steve Brooker, head of fair markets at Consumer Focus and author of the report, said: "What the public needs are robust, decisive regulators who aren't afraid to flex their muscles. At the moment some regulators are seen as dithering and slow to act when it comes to protecting consumers.
"The needs of consumers should be central to everything the regulators do, in much the same way that an understanding of customers is vital to any successful business."
Of most concern is the regulators' reluctance to intervene in markets when consumers are experiencing problems, the report said. To a large extent this is caused by a misplaced trust in "market mechanisms" to change firms' behaviour, such as Ofgem's faith in customers switching energy suppliers to regulate the £20bn domestic market.
The regulators were also criticised for relying on self-regulatory approaches without considering other, possibly more appropriate, forms of action. Direct intervention, for example, may be the best solution from the outset, said Consumer Focus, but too often this was considered as an option only after the failure of self-regulation. This was the case with the Financial Services Authority's handling of firms selling payment protection insurance where the regulator only stepped in after several years and numerous failed attempts at self-regulation.
Where the regulators have intervened directly, it was often a response to external pressure rather than as a result of their own decisions. Ofgem's probe into the energy market, for example, was only launched after significant public pressure.
The report also identified some confusion over where the role of government stops and regulator responsibility begins when tackling the needs of vulnerable consumers. While the government has primary responsibility for addressing social policy issues relating to the affordability of services, the primary role of regulators is to supervise the behaviour of firms. Consumer Focus said this division of responsibility was not clear and there was a danger that the needs of vulnerable consumers could fall into a vacuum.
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