The National Audit Office has criticised the FCA and three other regulators for failing to prove how they are responding to consumer problems and not offering enough protection to those in need.
In a report today the NAO found that the regulators understand the significant difficulties facing consumers in the financial services and utilities markets, but “cannot prove if they are effectively responding to consumer concerns or offering enough protection for those who need it”.
The NAO’s criticisms were directed at four main regulators: Ofwat, Ofgem, Ofcom the FCA.
These regulators have a duty to protect consumer interests by promoting competition, encouraging fair prices, setting maximum prices where competition is insufficient, ensuring adequate services are delivered and preventing unfair practices.
The NAO found the most common problem people seek help with across all four regulated sectors debt on utility bills and credit repayments.
It also highlighted the difficulties consumers face in finding the best deal, with customers who fail to regularly switch providers collectively facing a “loyalty penalty” of at least £4.1bn a year.
The problem is particularly severe for vulnerable customers who are less likely to switch supplier.
The NAO called for more robust systems to monitor regulators’ success in dealing with these problems and for co-operation across the sectors they oversee.
It also warned that regulators and government need to work more closely together to resolve “conflicts or trade-offs” between their different objectives.
NAO head Amyas Morse says: “Regulators need to do more to show the concrete results they are aiming to achieve for consumers.
“I understand that there is a difficult balance to be struck between long- and short-term outcomes, between the needs of businesses and the interests of consumers.
“But at present the regulators’ results can come across as somewhat academic and detached from peoples’ practical concerns and pressures.”
FCA chief executive Andrew Bailey says: “Protecting consumers is absolutely central to the FCA and where we have identified potential harm we have taken decisive action. Our recent work in the high-cost credit market, including implementation of the price-cap in the rent-to-own market, is just one example of this.”
“Understanding the impact of our interventions is an important part of our mission to ensure that financial markets are working in consumers’ best interests.
“We will consider the National Audit Office’s recommendations when evaluating our work to protect consumers.”