Consumer representation and redress - Further Response
Introduction
This response to the consultation
This further contribution to the consultation has been prepared in response to an invitation issued following consideration of the initial brief response appended to this document. It is offered from what still remains as a limited detailed understanding of the relevant issues and aims only to address what is understood.
It derives from knowledge gained through an extensive involvement with Ofcom on a particular point of policy. It reflects principles that have underlain that involvement, including close consideration of the nature of Ofcom's principal duties.
It is indirectly in response to points raised in the consultation on Ofcom's Consumer Policy, coterminous with this consultation, and echoes points made in the response to that consultation.
My involvement in the relevant issues
Since September 2003 I have been campaigning for the "Persistent Misuse" powers, covered by Sections 128-131 of the Communications Act 2003, to be used in performance of Ofcom's duty. This was recently expressed by the relevant government Minister, speaking on behalf of all of parliament, as being "to use the powers to eradicate the nuisance of Silent Calls".
I understand use of these powers to fall under Ofcom's principal duty to further the interest of citizens, as given by Section 3(1)(a) of the Act.
Ofcom wrongly argues that they fall within its principal duty to further consumer interests in relevant markets, as given by Section 3(1)(b) of the Act. In fact, Ofcom misrepresents both of these duties so that it may act only as a regulator of markets.
As Ofcom has never used its powers in the way described, this campaign continues.
My key point
I develop the point made previously after further consideration and closer research into the work of the Ofcom Consumer Panel.
The largest part of the work of this body is to assist the Ofcom executive in fulfilling the statutory functions of Ofcom. That would not be a proper function for a body, such as that proposed in this consultation, acting as an independent advocate of the consumer interest. The Ofcom executive must be responsible for performing its own functions as demanded by its board, in fulfilling its duties to parliament and the people. There is no indication that this is not what is happening anyway.
On formation of Consumer Voice, the work currently being undertaken by the Ofcom Consumer Panel will need to be re-assessed and perhaps split.
David Hickson
27 April 2006
Contents
Introduction 1
This response to the consultation 1
My involvement in the relevant issues 1
My key point 1
Contents 2
The duties of Ofcom 3
The role of the Ofcom Consumer Panel 4
Future role for Ofcom Consumer Panel 5
Within Ofcom 5
Within Consumer Voice 5
Markets, Regulators, Consumers, and relevant interests 6
The consumer interest in the market 6
Other interests furthered by bodies who also act as regulators 6
Examples of regulations that may not serve the interests of consumers 7
The role of Consumer Voice 8
Responses to the Ofcom consultation on Consumer Policy 10
The NCC response 10
Appendix 10
Introduction 1
This response to the consultation 1
My involvement in the relevant issues 1
My key point 1
Market Regulators 1
Answers to the consultation questions 2
Q9 Do you agree that funding should be made partly from Government and partly from those industries that contribute to the funding of sectoral consumer bodies at present? 2
Q10 Which duties and obligations on the sectoral consumer bodies should be transferred to Consumer Voice? Please give reasons. 2
The duties of Ofcom
Section 3(1) of the Communications Act 2003 defines the two distinct principal duties of Ofcom.
(a) to further the interests of citizens in relation to communications matters; and
(b) to further the interests of consumers in relevant markets, where appropriate by promoting competition.
The key point about the second duty that is widely misunderstood, or deliberately misinterpreted, is the qualification of the "consumer interest" contained in the definition. It is only those interests of consumers "in relevant markets" that fall within the duty of Ofcom as a market regulator. Other interests that cannot be met by the operation of the specific markets that fall within Ofcom's functions must therefore be covered by its first principal duty. Ofcom cannot be required to further interests that cannot be furthered by it acting as a market regulator or by its other defined functions.
Chapter 1 of Part 2 of the Communications Act 2003 sets out Ofcom's functions in relation to Electronic Communications Networks and Services. This consists mostly of the regulation of markets under its second principal duty. Unfortunately Ofcom, with the support of its Consumer Panel, sees all of its functions under this Chapter as being covered by this duty. It sees the first principal duty as providing nothing more than a fuzzy overlay to its approach to policy making in this area.
As this part of the Chapter was sweeping up previous legislation, other items have been included. Whilst they are intended to protect the interests of those who are consumers of Electronic Communications Networks and Services, they do not bear on the providers of those networks and services (when acting in that role) and are therefore unrelated to markets regulated by Ofcom.
· Offences relating to networks and services (ss 125-127)
Although breaches of s127 are commonly confused with activities that fall under s128, Ofcom is not involved in these at all.
· Persistent misuse of network or service (ss 128-131)
These give powers to Ofcom, unrelated to its role as a market regulator.
· Restrictions in leases and licences (s134)
These give powers to Ofcom, unrelated to its role as a market regulator.
The Ofcom Consumer Panel correctly sees these items as falling outside its remit with reference to this chapter. It interprets this as relating only to Ofcom's performance of its second principal duty, as a regulator of markets.
Ofcom itself, by its Statement of Policy on use of the Persistent Misuse powers, and even more improperly by its actions and news releases, pretends that these powers are in support of an undefined duty to regulate an undefined market in the interests of an undefined body of consumers. Attempting to identify the respective duty, market and consumers reveals the impropriety of the approach,
Consumer Voice must use the widest possible interpretation of the consumer interest, with no regard for the issue of markets, so that its advocacy may be unrestricted by the narrowness of approach shown by both the Ofcom Consumer Panel and Ofcom.
The role of the Ofcom Consumer Panel
This body appears to be a group of specialist advisors to Ofcom with a particular focus on the interests of the elderly, the disabled and the "parts" of the UK. Its accountability as a body is entirely within Ofcom.
Ofcom uses its own ability to consult directly with the public, conduct its own research, refers to evidence of consumer interest from other sources and makes its own assessments of the consumer interest. This is as demanded by s16 of the Communications Act. In accordance with ss20 and 21 it also has its own committees covering the elderly, the disabled and the nations ("parts") of the UK
The Consumer Panel, as a body, adds nothing in terms of purpose and focus, it simply provides a useful adjunct to Ofcom's direct resource through the knowledge and skills of its members.
Claims that the Panel is independent from Ofcom directly contradict the provisions of the Act. The membership is approved by the Secretary of State and the members themselves will be representative of interests other than those of Ofcom. The Panel is however selected by Ofcom, part of its structure and has no separate objectives. It has a sizeable degree of autonomy in how it fulfils it role; but that is not independence.
A significant clue to an understanding of the Panel is given by a comment in its published response to the DTI Consumer Advocacy and Redress Consultation.
"We also think that there is an important distinction to be drawn between cross-sectoral advocacy and the ability to get traction with a sectoral regulator on consumer issues – which requires sustained focus and in-depth knowledge and experience."
By this comment the Panel confirms its own role, the second given, as being to work on Ofcom from the inside. As it cannot declare any objective that is separate from that of Ofcom, it cannot be seen as anything other that a management aid to the Ofcom executive in fulfilling its defined proper function.
This is further confirmed by comments on its role in the forward to a recent publication "Capturing the consumer interest - A toolkit for regulators and government". Its chairman declares its role to be relevant to addressing failures by particular Ofcom personnel in performing Ofcom's duty. The entire purpose of the "toolkit" is to provide a management tool to assist Ofcom in fulfilling, or justifying evasions of, its statutory duties. Again this places it entirely within the structure of Ofcom, supplementing the duties of the Ofcom board in directing and supporting the executive.
Clearly the members of the Panel help Ofcom to perform its functions by filling apparent gaps in its capacity to do so from within its own resource. It has no place in Consumer Voice, which must focus on the Consumer, not the Market, recognising, rather than supporting or duplicating, the proper role of the Market Regulators.
If a body such as Ofcom is unable to do the job demanded of it, this fault must be rectified within that body, if necessary by adjusting the level of funding available to it. Its deficiencies cannot be made good by a separate body, such as Consumer Voice, with a different purpose and funded in a different way.
An essential part of the Ofcom management structure cannot be exported to sit within another body, nor can a body with a broad remit to address matters of concern to consumers have one sector covered only by a part of the relevant market regulator.
Future role for Ofcom Consumer Panel
Within Ofcom
In its own response to this consultation the Panel sees its role as unchanged.
That portion of its function that is cosmetic (appearing to be a independent consumer representative body) would be made redundant with Consumer Voice taking actual responsibility for such a role.
Much of its work involves the collection of evidence or commissioning of external work. Ofcom itself must carry the responsibility for collecting evidence necessary to the fulfilment of its functions, in the manner most appropriate to support its own operation. Ofcom already does this. If Ofcom management sees the need for a particular "toolkit" to help its decision-making, commissioning the work to develop such a tool must be a decision for Ofcom.
Three select committees of parliament carry the responsibility for "auditing" Ofcom - Trade and Industry, Public Accounts and Culture Media and Sport.
The specialist skills, knowledge and experience of its members appear to be the only benefits the Panel has to offer to Ofcom. If Ofcom needs to retain an in-house advisory panel to supplement shortcomings in its own capabilities to assess and understand that which is the object of one of its two principal duties, then it must justify this as part of its resource.
Within Consumer Voice
The specialist skills required of members of Consumer Voice are those of Consumer Advocacy in the context of the relevant sectors.
It is vital that Consumer Voice does not attempt to work from the inside of the Regulators. If there are internal management issues that need to be resolved, that is the responsibility of the respective executive. Consumer Voice may identify what it may see as such issues, although it is vital that it does not "go native" and try to resolve them itself.
Consumer Voice must have a clearly separated objective to serve the "interests of consumers", not just those interests that can be addressed through the markets as they are understood by the Regulators, and those to whom they sub-contract their duties (e.g. ICSTIS).
Members of the Ofcom Consumer Panel who share Ofcom's way of understanding the markets that it regulates are thereby inherently unsuitable for membership of Consumer Voice. It is likely that those most knowledgeable and most experienced will be most likely to be in this position.
The resource of those who are knowledgeable on sectoral issues must be available for Consumer Voice to exploit whenever this may be seen as valuable in advancing the consumer interest. It is however vital that all such resource may be called upon to provide "witness evidence" in support of Consumer Voice's advocacy, regardless of where it is regularly deployed.
Only if the structure and the membership of the Ofcom Consumer Panel were able to take on the new role, and Ofcom were able to accommodate the loss of this resource, could it be transferred over directly.
Markets, Regulators, Consumers, and relevant interests
It is imperative to understand that many specific approaches to serving the interests of consumers, citizens or whatever, however these may be defined, arise from a single determination made in relation to the sectors in question.