Watchdogs 'need to prove they protect consumers' says NAO
Four major UK regulators need to do more to prove they are offering enough protection to those who need it, spending watchdog the NAO has said.
Ofwat, Ofgem, Ofcom and the FCA understand the "significant difficulties" facing consumers.
But they can't prove they are effectively responding to them, the National Audit Office (NAO) said.
The most common problem facing consumers in these sectors was how to handle debt, the NAO added.
The watchdog recommended that regulators do more to measure their performance "so that they can understand what is working well for consumers and what isn't".
The most common consumer problem across all four sectors was dealing with debt from bills and credit repayments.
The situation for some consumers has not been helped by real-term price increases of 28% in gas, 37% in electricity and 6% in water since 2007.
Consumers can find it difficult to get the best deal or service, leading to those who fail to switch paying a collective "loyalty penalty" of an estimated £4.1bn a year, the NAO said.
Vulnerable customers are less likely to switch, the spending watchdog noted.
It added that 15% of broadband customers complained about their service last year, most commonly about connection problems, while 36,000 homes were left without any water for more than a day during last year's "Beast from the East" bad weather.
The NAO said regulators do not have a common way of measuring or sharing issues that affect consumers across the different sectors they regulate.
It added that regulators have not been specific enough in defining what they would like to see happen for consumers, saying that "high-level aims" were not matched by practical targets.
Amyas Morse, NAO head, said: "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 people's practical concerns and pressures."
An Ofgem spokesman said: "We agree with the NAO that regulators need to effectively measure their impact to help deliver the best possible outcomes for consumers.
He added that Ofgem "has already made progress in this area".
"Last year, for example, we published our first Consumer Impact Report measuring how much our regulatory decisions were expected to benefit consumers and we also publish annual reports on the state of the energy market and on the situation of vulnerable consumers."
An Ofwat spokesperson said it would "look seriously" at the NAO's recommendations.
An Ofcom spokesperson said: "We'll keep working closely with other regulators, exploring different ways to measure the effectiveness of our work."
Andrew Bailey, chief executive at the FCA, said: "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."
Consumer group Which? said that there was a severe lack of trust in some essential markets "because people don't believe their interests are being put first".
Caroline Normand, Which? director of advocacy, called for more powers for regulators "to take on the might of powerful companies."
"Regulators must also step up and clearly demonstrate how their work is making a positive difference and stopping people from getting ripped off," she added.
Labour shadow business secretary Rebecca Long Bailey said: "This confirms what households struggling with extortionate bills have known for a long time: regulators have a limited ability to protect customer interests.
"This is partly due to a lack of regulatory teeth, and partly due to the inherent contradictions in pitting the needs of bill payers against those of private companies looking to maximise profits.
She added that a Labour government would "fundamentally reform our regulatory system, for example, by absorbing Ofwat into Defra to create a National Water Agency."