Trialling consumer remedies
We welcome the opportunity to respond to Ofcom’s consultation ‘Trialling Consumer Remedies’. In our response, we have also taken the opportunity to comment on the Broadband Pricing Review, and the plans outlined in Ofcom’s Statement ‘Helping consumers get better deals: A review of pricing practices in fixed broadband’.
We are pleased that Ofcom has managed to secure voluntary commitments from the 6 largest broadband providers to protect their loyal and disengaged customers from price differentials. However, we are calling on Ofcom to provide further evidence about the likely impact of the commitments. Based on the information provided, we are concerned that the commitments do not go far enough and will leave many vulnerable consumers over-paying. Sky, EE and Plusnet have made no commitments to protect vulnerable consumers. Many vulnerable consumers with BT, Virgin Media and TalkTalk will also continue to be harmed by price differentials for a number of months before benefiting from the commitments. This is unacceptable - all providers must strengthen their commitments to ensure all vulnerable consumers are protected from the loyalty penalty.
Protecting vulnerable consumers should also be a priority for Ofcom. There is compelling evidence that some vulnerable consumers find it more difficult to engage, and price differentials will be felt more acutely by consumers who are on low incomes. Therefore, we support Ofcom’s suggestion that targeted action may be required to protect vulnerable consumers, even if they are no more likely to be harmed than other consumers. We are however disappointed that Ofcom have not reviewed the potential impact of targeted price caps compared to the voluntary commitments and social tariffs. While we recognise that the EECC places constraints on Ofcom’s ability to cap prices, the Government and consumer organisations should be able to see if Ofcom’s plans are more or less effective than price controls could be.
We support Ofcom’s proposal to introduce a new general condition which would require providers to take part in consumer trials, subject to additional consultations on a case-by-case basis. Better demand-side remedies, such as notifications and collective switching, will boost engagement for many consumers. But evidence from other markets strongly suggests that the impact of demand-side interventions will be modest. Consumer engagement remedies must be paired with protections for vulnerable consumers and those who struggle to engage.