APPG on Consumer Protection – Report from the Ombudsman Inquiry.
By Gavin McBurnie
The All-Party Parliamentary Group on Consumer Protection (the Group) published the report of its inquiry into ombuds on Wednesday 30 January 2019.
The inquiry was the result of ‘long-standing concerns about the wide variation in the standards of complaints handling and reports of customer confusion’ (APPG Consumer Protection 2019, p.5).
The Group noted from evidence submitted, particularly from the LGSCO and the Ombudsman Association that the current consumer ombuds system was fragmented with competing schemes, and concluded that it was ‘this coincidence of omissions and overlaps which surely leaves the consumer most confused’ (APPG Consumer Protection 2019, p7). Other problems that were identified by the Group included:
- Not all businesses need be members of their industry scheme,
- The rules around complaining to ombuds may deter complaints being raised,
- The timeframe for first-tier complaint handling is too long,
- This is compounded by the length of time ombuds take to consider the complaint, and
- Poor communication between ombuds and complainants.
As a result of its inquiry, the Group made nine recommendations. The first, and most important recommendation is that the Government should ask the Law Commission to review the overall second-tier consumer redress system, proposing one ombuds per consumer sector, and for this ombuds to have compulsory membership (APPG Consumer Protection 2019, P.27). Linked to this a second recommendation is that schemes which do not have mandatory membership, nor binding recommendations should not be allowed to use the ombuds title (APPG Consumer Protection 2019).
These proposals would bring such schemes into line with Australasian industry based second-tier consumer dispute resolution schemes, where the ombuds title is protected, membership is mandatory, competition between schemes is not allowed and binding recommendations can be made, although these, rightly, tend to be the approach of last resort (ANZOA 2019).
In New Zealand, where there is also no competition between schemes, a broad approach to the definition of sectors operates – Utilities Disputes Ltd, began as the second-tier complaint body for energy complaints, but recently has taken on responsibility for complaints about broadband and water providers (Utilities Disputes 2019). This makes sense as they are all public utilities, and, makes particular sense in New Zealand where, for example, some energy companies also provide broadband services. Therefore, if the proposal for one ombuds per sector is implemented in the UK the system would need to take account of any future changes in consumer markets to ensure that the one ombuds per sector reflected these changes.
Other proposals of interest within the report are
- All ombuds should provide reports to Parliament, via the appropriate select committee which is seen as particularly important in unregulated sectors.
Given the important role that these schemes would undertake, then reporting to the relevant select committee does not seem unreasonable. It would be one method for parliament to gain information about the operation of particular consumer sectors and, thus, potentially, help ensure their effective functioning and the protection of consumers. It would also ensure an increase in the accountability of such ombuds schemes. Accountability would also be increased through the proposed requirement for all ombuds to publish annual reports, containing case examples. Again, this last recommendation would bring arrangements in line with current Australasian practice.
- Any person to be appointed to a senior role in these ombuds schemes should undergo a ‘fit and proper person test’ which would be undertaken by the BIES (APPG Consumer Protection 2019, p.27).
There is little in the report that indicates the specific problem that this recommendation is trying to solve beyond the fact that MoneySavingExpert made this proposal and that it is supported by the Ombudsman Association. However, as an idea, it is not without its merits. If ombuds are to be established as mandatory organisations with the potential for making binding recommendations on members, thus giving them an enhanced role within the consumer justice system, then ensuring that the ombuds is a fit and proper person is entirely reasonable.
The final recommendation of interest is that ‘there should be commitment to research the viability of a ‘single portal’ for all consumer complaints’ (APPG Consumer Protection 2019, p.27). This was prompted by the recognition of the complexity of the current system and the confusion that this causes consumers. As part of its considerations the inquiry was informed of the existence of such schemes in South Korea and Belgium where there were different outcomes, with the latter being seen as relatively unsuccessful. The idea of a single portal for complaints is not new but the challenge of creating an effective system in a complex landscape has always proved very difficult and this complexity was highlighted in the report (APPG Consumer Protection 2019, pps. 19-21). Thus, while the idea for research in this area is to be welcomed, I suspect that any solution may be problematic as it will be dependent, among other factors, upon there being clarity about the roles and boundaries among many different organisations, which does not always exist.
This is an interesting and important report and it is welcome that at least some members of parliament are interested in the effective functioning of second-tier complaint handling. It highlights deficiencies in the current consumer redress system and makes important recommendations. One minor criticism is that it could have made use of the experience and approaches of the industry-based consumer redress system in place in Australasia. Beyond that, one hopes that this government, if it can see beyond Brexit, or, indeed, a future government, takes its recommendations seriously.
Gavin McBurnie is a Lecturer in Dispute Resolution in the Queen Margaret Business School. He is also a full member of the Consumer Dispute Resolution Centre.
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