There’s a new opportunity to reduce consumer detriment – let’s not squander it
Lewis Shand Smith, Chief Ombudsman at Ombudsman Services
Change is afoot. Or at least there’s opportunity for change. And it comes in the form of the Government’s recent Modernising Consumer Markets Green Paper. At the moment, many of our markets are not working for consumers the way they should – and with a shifting political and technological climate we can either rest on our laurels and expose people to detriment, or seize the chance to strengthen consumer protection.
The world around us is changing, and the legal framework is becoming out-of-date. With the growth of sites like eBay and Etsy, there are more consumer-to-consumer transactions than ever before, and there is currently nothing in place that can protect both those selling and those buying. It’s complicated but there are ways around this – for example, if a small fee was applied to every transaction, there could be an insurance backstop to protect consumers and sellers if there is a problem.
While many consumer protection regulations need updating, there is also the issue of access to redress. Last year, only a quarter of issues experienced by consumers were raised with providers, with confusion as well as a lack of awareness playing a significant role. In order to improve relationships with consumers and businesses it is essential that there is a fair, simple and transparent system in place.
In many sectors, particularly unregulated sectors, the system for getting complaints resolved is confusing. Take the housing sector, there are currently as many as nine redress schemes dealing with different parts of the process – how is anyone to know which one is the right one for their issue?
In sectors like this, there should be single ombudsman, supported by regulation and an effective consumer advocacy body. This three-pronged approach would not only simplify complaining for consumers, it would enable stakeholders to work together to identify systemic issues and nip them in the bud, before more people are affected.
But while more can be done to improve access to redress, and raise awareness amongst consumers, prevention will always be better than cure. If all stakeholders – redress providers, government, advocacy groups, service providers – work together to share data and insights on the customer journey and complaints, then companies can use that data to make things better for everyone. This will require fast and efficient technology to be in place – and it’s certainly easier in regulated sectors.
Technology also presents opportunities to take the concept of data sharing even further. The increase in data portability and development of initiatives like Open Banking put consumers firmly back in the driving seat, and if used intelligently, they can also be used to help some of the most vulnerable members of our society.
However, with digital technologies developing at speed, it’s crucial that the correct regulatory framework is in place – or we risk hindering consumers, rather than helping them. There will need to be standards, regulation, redress and consumer advocacy – all aimed at protecting consumers’ personal data from being mis-used, and ensuring that algorithims do not discriminate or leave certain groups of consumers at a disadvantage.
Having these basics in place will be essential to building trust in the way that data is used. But the benefits could be substantial. Data portability in particular has the potential to create smoother journeys for consumers, allowing government departments to work with companies, particularly those in regulated sectors like energy and water, to ensure that consumers do not have to repeat the same information constantly, and that those who require additional support are immediately indentified or offered help automatically.
It would also present new opportunities for increased competition and innovation. As with Open Banking, the sharing of data would allow companies to create products specifically tailored to individuals – a consumer-centric approach that would help to improve the customer journey, making it faster and easier, and ultimately leaving people better off.
But there are two sides to every coin, and just as companies would be able to reduce consumer detriment through data portability, consumers also need to have access to data that allows them to make informed decisions about their products and services. However, this data needs to be published using a joined up approach with consumers at the heart – presented in a way that is clear and accessible.
With both data portability and publishing there is work to do to establish trust amongst consumers. It’s crucial that people understand their rights with regards to how data is used, trust that it is secure, and know what data is available to help them.
It will take commitment and investment from the government and business, but the overall benefits are too great to be ignored. Strengthening consumer protection laws and using technology to improve markets for consumers is an opportunity that must be seized – and now is the perfect time.
Lewis Shand Smith is Chief Ombudsman at Ombudsman Services, a not-for-profit organisation that operates a number of national ombudsman schemes across sectors including energy, communications and property.