Citizens Advice response to BEIS’ Smart Data Review
We are pleased to respond to the government’s consultation on Smart data: Putting consumers in control of their data and enabling innovation and we welcome the review’s commitment to ensure consumer needs are at the heart of Smart Data initiatives.
Citizens Advice represents the voice of consumers across essential markets and has a statutory duty to represent energy and post consumers across Great Britain. Our work to improve the policies and practices that affect people’s lives across these markets has informed our response to this consultation, with a particular focus on examples from the energy market. We have also drawn on our experience in digital services, communications, financial services and pensions markets.
Smart Data can be used to improve outcomes for consumers. It can enable new services that help people reduce costs on household bills, protect them from being ‘locked-in’ with specific service providers and reduce the price of switching. However, there are important risks that must be considered to ensure all consumers are able to benefit and are treated fairly within Smart Data markets:
Smart data is not guaranteed to reduce the loyalty penalty. Those already engaged in the market may see benefits from Open Communications, and it may encourage people to switch. However, those who do not engage or are unable to switch may get left behind. These customers will need adequate protections.
Distributional impacts mean some consumers might be left behind. This could exacerbate existing issues as those who can access the service benefit, and are effectively subsidised by those who cannot. Often it is vulnerable consumers who end up paying the price for being less able to use these new services. Distributional problems are complex and do not elicit easy answers, but given that disengaged customers face a ‘loyalty penalty’ of nearly £1,000 a year for their essential services, this problem must be tackled nonetheless.
Principles of transparency and control must be managed from the start. Consumers need to understand what is happening to their data and be able to choose who they share it with, for what purposes and tailor or amend these choices over time. Data privacy should also be built into technologies and services by design.
Smart Data markets must be supervised and regulated. Regulation must be updated to effectively operate across sectors. Consumers need to be protected and offered the same standards of service in every Smart Data market.
New systems must be built around the needs of vulnerable consumers. Citizens Advice helps vulnerable consumers with problems across regulated and unregulated markets. Our experience and research with consumers in vulnerable circumstances informs our answers throughout this response. We welcome the government’s commitment to place vulnerable consumers at the centre of the Smart Data Function. To ensure that Smart Data improves outcomes for these consumers, impacts of new services must be carefully considered from the start.