Regulators set sights on consumers
11 June 2009
Regulators "can never be too accountable to consumers" was the message at the Consumer Engagement roundtable jointly sponsored by the Solicitors Regulatory Authority and the National Consumer Council, late last year.
The event, chaired by Jitinder Kohli of the Better Regulation Executive, featured presentations from John Howard of the Financial Services Consumer Panel and Tim Whitaker of the Human Fertilisation and Embryology Authority. Held at City Inn, Westminster, on 4 December 2007, the roundtable pulled together national regulators, government departments and consumer organisations, including Ofcom, the Advertising Standards Authority and the Ministry of Justice. Topics covered a broad range of ideas on integrating consumers into decision making, how new technologies aid regulators to communicate with consumers and the important question of what members of the public really want from a regulator.
You can download a full list of attendees and a foreword by Antony Townsend (chief executive, Solicitors Regulation Authority) and Philip Cullum (deputy chief executive, National Consumer Council).
You can never be too accountable
Regulation is as ever under the political spotlight. The government continues to urge light touch regulation and the Local Better Regulation Office has recently set up to spread the message locally. But how can regulators best find out what matters to the people whose interests they are ultimately there to protect? You can never be too accountable to the consumer, the roundtable heard.
The internet is rapidly changing the way regulators and consumers interact. A big question for regulators to address is how they respond to consumers who are using new media as a way of organising themselves into powerful lobbying groups. But, as well as the challenges it poses, the internet also offers regulators new opportunities to engage with consumers directly to inform decision making. However, mindful of the potential legal potholes, regulators seem wary of doing this. But there was widespread agreement at the event that it has to be embraced. Some regulators are already well practised at going boldly into chat rooms and online forums as a means of asking questions or getting feedback on issues. The Human Fertilisation and Embryology Authority is a good example. Others are more reticent, but keen to dip a toe in the water.
"We've got to move into the current century", urged one participant. The internet also forces regulators to communicate more clearly in plain English, something they have failed to do in the past, noted another.
Real engagement, not PR
There must be a distinction between real engagement and PR exercises, it was agreed. One participant claimed that some so-called surveys by campaign groups turn out to be nothing more than a bit of PR. What may appear to be a mass of critical opinion on a subject may instead have been contrived by advocacy groups getting together and presenting "spurious statements" as research.
But at the same time, smaller bodies that operate in niche markets said they would welcome a greater level of lobbying, as it's difficult for them to get anyone involved in a debate. People are also much more willing to look at problems of the past than talk about the way forward, participants suggested.
While regulators are unlikely to be doing it right all the time, it's important to learn from those who are doing it right some of the time, and participants came up with examples of good practice in their fields. Ofgem, for example, had listened to its customers about priority service issues—those customers who may be older or infirm and can't physically get up on a table and read their meter—and services were reconfigured around their needs.
But sometimes there may be a gap between what people say they want in an ideal world and what they are happy to settle for in reality. For example, people told the Commission for Social Care Inspection that there should be more regulation of social care homes. However, when the regulator examined the issues in more detail, it found that cutting the need to inspect each home on 39 separate standards every time they visited—to a template of 15 or so key standards such as safety, dignity and respect—was actually more in tune with what people were really concerned about.
"It's about how you inspect against what matters to people. When government sets standards, it involves a lot of paperwork and bureaucracy, whereas people care about how their personal needs are catered for."
However, sometimes it's consumers who demand less, not more, regulation. One example involved research into weights and measures regulation carried out by the National Consumer Council for the Department for Business Innovation and Skills. This found that people didn't care that bread and other breakfast-table staples had to be sold in standard package sizes, much to the surprise of regulators.
Open and accountable
In terms of what works, the first step is to be open and accountable so people know you're there—the Food Standards Agency was praised for holding its board meetings in public and streaming them over the internet.
It's also vital for regulators to go out and tell people what they are doing. Having found that complaints about violence on TV had risen fivefold on last year, Ofcom held consumer engagement events around the country focusing on knife and gun crime and violence in video games. By doing so, they reached a much wider, more diverse audience than their usual method of asking people to come along and discuss general issues.
One of the simplest things all regulators can do is encourage consumers to complain about the way in which regulators deal with their problems, said one participant, noting that too often the stock response will be a defensive one, assuming that complaints are wrong. "This misses a huge and valuable vein about priorities and how people feed back."
New engagement techniques
In addition to traditional research methods, such as opinion polls and focus groups, increasingly regulators are experimenting with a wider range of consumer engagement techniques. These include: deliberative research methods; sitting on the consumer's shoulder all the way through the decision-making process, from first thoughts to evaluating outcomes; and the use of "experts by experience"—where users of services get direct feedback from other users, as they are best able to relate to them.
But the bottom line is that these kinds of consumer engagement techniques can be expensive, and organisations working to tight budgets have to find a way of justifying the extra expenditure. This must be balanced against the potentially costly damage to reputation that the organisation may suffer if they get it wrong and don't consult.
An example was given of a controlled experiment carried out by the Environment Agency in which they engaged with consumers at an early stage of building flood defences. This made a huge difference, they said, compared with a previous scheme, where people were not consulted. This caused a lot of anger and culminated in being overturned at judicial review. "The cost of engagement upfront was less than the total cost of the disaster that happened if you didn't engage."
It is also critical to remember that consumers are not a homogenous group—different techniques need to be employed in different situations and, most tricky of all, it's necessary to find a way to engage people other than "the usual suspects".
All roundtable participants agreed more learning and sharing of experience was needed, but more questions were raised than answers. How can regulators ensure engagement doesn't just tick a box but really translates into policy change? What are the best ways to engage "hard-to-reach" groups? What does success look like and how can it be measured?
The three speakers
Antony Townsend, Solicitors Regulation Authority
Antony Townsend, chief executive of the Solicitors Regulation Authority, said the SRA was pleased to be hosting this event jointly with the National Consumer Council, which for the first time brings regulators together to discuss consumer engagement.
The Solicitors Regulation Authority was launched in January 2007 and has an appointed board of nine solicitors and seven lay members. It is the independent regulator of the solicitors' profession with the aim to "protect the public interest".
One of the first tasks has been to look at how to engage its consumers. Getting consumer feedback on solicitors is a "tough nut to crack", said Antony. The SRA commissioned research to provide it with baseline information on how consumers viewed solicitors and the service they received. More importantly, the research also tested consumer attitudes to the issue of referral arrangements, a key area of policy concerning the SRA.
Antony said that one of the findings of the research was that people would only contact solicitors at a time of high stress and, as the product was "rather obscure, it was difficult to get a handle on consumer concerns."
One of the main concerns to come through the quantitative part of the research, which involved a survey of 1,000 service users, was that people felt there was an imbalance of power between solicitors and consumers and that they didn't know where to turn when things went wrong. It revealed that 65 per cent of those responding were satisfied with the service they received and 19 per cent were dissatisfied with major concerns being around time, value and cost.
The research highlighted another major concern which related to the referral fee arrangement that solicitors use. People were not always aware what the procedure meant, and concerns were raised about the independence of the advice they received. But the research showed that people are happy as long as it is made clear exactly what is going on and when money is changing hands. The same conclusion was reached by the SRA Board.
The SRA is keen to promote consumer engagement as an important element to its regulatory policy development, it and sees its research and this joint event as the first step to developing an effective and inclusive consumer strategy. The SRA is also keen to share and learn from other regulators.
John Howard, Financial Services Consumer Panel
"I think some financial services firms see consumers as a meadow over which they may safely graze, and the shepherd is the regulator", said John Howard, chairman of the Financial Services Consumer Panel, an advisory body to the Financial Services Authority (FSA).
The panel complements two other panels (practitioners and small firms) and has 14 members from all walks of life such as marketing, academia, journalism, and people who work in Citizens Advice Bureaux.
The crucial thing for the Consumer Panel, he said, is that the FSA consults us on its plans at a very early stage in the decision-making process. "If you speak to someone before they have made their mind up, you are more likely to have an influence."
The Consumer Panel also assesses the effectiveness of the FSA, something that proved quite challenging in the first year. They decided to judge the regulator from the point of view of an informed consumer. This was controversial at first, but, in the second year, the panel signalled weaknesses after six months, and this lead to FSA staff acting on them and making improvements before the panel's end-of-the-year effectiveness review.
There is a risk of regulatory capture—the feeling that the panel might be seen as too close to the FSA. But panel members only serve for a maximum of six years and are not the sort of people to be easily captured, he said. If there was ever a real conflict of opinion, which the panel wanted to make public, the panel would go to one of the other consumer organisations to get the issue aired, rather than fall out completely with the regulator. The panel believes it's more important to keep communication lines with the FSA open and on good terms.
"Having a Consumer Panel within the regulatory architecture is a fantastic bonus for consumers. It gives consumers a direct line to the decision makers and I believe produces regulation that is more effective and considered."
Tim Whitaker, Human Fertilisation and Embryology Authority
The Human Fertilisation and Embryology Authority described how it had to engage with very well-informed consumers regarding IVF, as well as voracious lobby groups, on what are difficult ethical issues.
"We dream of having a quiet life!" said Tim Whitaker, the authority's director of Policy and Communications.
They use a variety of methods to listen to their patients, including an online panel, focus groups of patients on policy issues and patient feedback and complaints.
The Fertility Views Panel, run by Opinion Leader Research, is a self-selecting panel of around 800 members, through which they can put out surveys or questions on various hot topics. There's also lots of space for members to feed back their own concerns. Within 24 hours of putting up a survey, they can typically have 400 responses, he said.
Other, more traditional, methods are used for explaining their work—it's a very complex field. Difficult topics include multiple births and embryo transfer. It's an area that's susceptible to the pro-life lobby, for example, and they have to be careful to balance scientific views with other ethical perceptions. He also described how the organisation will go on to web forums and chat rooms to challenge misperceptions.
But he warned that, while you can use sophisticated consultation mechanisms, these alone will not change the culture of an organisation—it's how engaging with consumers and the public influences the decision-making process that matters.