One month on...
Since we opened our doors on 1 October, it’s been a busy month. The global banking crisis, the judicial review on the Government’s implementation of its fuel poverty strategy and a recent report by Ofgem on the energy market have all quickly highlighted the tough times that consumers are facing.
From Ed Mayo, Chief Executive
In such early days for our new organisation, we are delighted that Ofgem has agreed that companies should cut fuel bills for the poorest consumers who have paid over the odds (we estimated to the tune of £540m) when using prepayment meters. This has been a long-standing injustice and we hope that energy companies will take steps swiftly to reduce tariffs for these customers. This is one route to helping tackle fuel poverty, but there is still much more to do, with millions facing a struggle to heat their homes this winter.
The financial crisis has of course been hugely concerning for everyone. We welcomed recent efforts to inject much-needed stability into the banking sector, however it is important that any consolidation that takes place – for example large-scale mergers – does not result in consumer detriment. The long-term, as well as the short-term, national interest must be served.
If banks are too big to fail and will therefore be rescued if things go wrong, they also have return obligations to us as taxpayers and consumers. With this in mind, Consumer Focus recently hosted a roundtable session on the consumer response to the current situation (see below), and I also recently wrote to the new Secretary of State for Business, Lord Mandelson.
Responding to the financial crisis
It is clear that the banking crisis is having a very real and immediate impact far beyond just the wholesale financial markets, and is hitting ordinary households hard. Since Consumer Focus started work last month, the issue of how we can protect consumers throughout the financial turmoil has been a key issue for us.
Several weeks ago, we hosted a roundtable discussion with colleagues from a wide range of influential consumer and pubic interest groups to discuss their views on, and responses to, the crisis. What was striking was the sheer breadth of action that is required to give greater support and protection to consumers. Tackling mortgage arrears sensitively and maintaining access to credit; making regulation work more effectively; finding solutions that meet the financial needs of consumers excluded from the markets – these are just a taste of the issues that need tackling, and swiftly.
Greater consumer protection, regulatory reform and innovative solutions to the current problems are needed, and Consumer Focus will look to work closely with other organisations, industry and government to ensure consumers receive the support they need.
NSPCC and marketing to children
On 16 October, Ed gave the keynote address at the NSPCC’s Annual Conference. His speech focussed on a key concern: marketing to children.
At the same time, Consumer Focus wrote a letter to the Advertising Association calling for websites aimed at children to be classified as advertising, thereby being subject to the Committee of Advertising Practice (CAP) codes. Doing this would be an important and powerful extension to the rights of the next generation of consumers.
Fuel Poverty
Tackling fuel poverty is our first major campaign priority. We are working as part of a coalition of poverty, environmental and consumer organisations to press for more concerted government action.
Our work has already started. The government has accepted that it is not going to hit its fuel poverty targets and two of the coalition members – Friends of the Earth and Help the Aged – used a judicial review in the High Court to challenge inadequate government action.
In the meantime, Consumer Focus has pressed for action that addresses both the immediate need for short term help with energy bills and the long term need for investment in energy efficiency. Our Chair Lord Whitty tabled an amendment to the Energy Bill that would place a statutory obligation on suppliers to provide energy assistance packages to low income consumers, with the Government taking responsibility for defining which households should be eligible.
Importantly, the amendment proposed that fuel poor consumers would be charged the lowest available tariffs until their homes were raised to a set minimum standard of energy efficiency. Such a change in approach to tackling fuel poverty would be radical, but would bring major social, environmental and economic benefits.
Although the amendment had to be withdrawn for technical reasons, we will be pressing for it to be taken forward as a Private Member’s Bill. The current voluntary approach to social tariffs is not working. Consumers – particularly those five million people who will be unable to heat their homes this winter – need greater protection set out in law.
Our Extra Help Unit
With over 1,000 vulnerable consumer cases already being taken forward, our Extra Help Unit is well and truly up and running. Based in Glasgow, the team helps energy and post customers who are referred to us and need additional assistance in taking up a complaint with their service provider.
These cases come through to us from Consumer Direct, which should be the first point of contact for customers needing advice and information on how to complain. The Consumer Focus Extra Help Unit also takes referrals from regulators and redress schemes, and MPs (and politicians in devolved Governments).
We are also aiming to help advice agencies help their customers. We provide a telephone service to advice agency staff to help them answer energy and post queries, and also have an online knowledge base that gives useful information on these issues.