New watchdog targets rising prices

By Ian Pollock
Personal finance reporter, BBC News

Energy bills will come under close scrutiny, the new watchdog says

Energy companies and their rocketing bills look likely to be the first target of a new, beefed up, consumer watchdog.

The body will be called Consumer Focus, and will take over from the existing National Consumer Council (NCC), its counterparts in Scotland and Wales, and the existing watchdogs Energywatch and Postwatch.

The new organisation starts work on 1 October and its new chief executive Ed Mayo said it would be a "consumer watchdog with teeth" that would attack "profiteering".

Mr Mayo, former head of the NCC, said the revamp was needed because "the consumer agenda is almost a survival agenda for many people, especially the older, those on a fixed income".

Referring to rising prices, particularly for energy bills, he said the new body would have new statutory powers "to hold companies to account".

"We are seeing dramatic food price rises, energy prices and anybody who has moved from a fixed mortgage rate will have found their costs increasing quite dramatically," said Mr Mayo.

Bodies will be set up in England, Scotland, Wales and Northern Ireland.

More teeth

The UK has had consumer watchdogs of various sorts for decades, alongside much legislation giving people the power to complain and return shoddy goods, or to ask for their money back if they received sub-standard services.

Closed and protectionist European energy markets can end up picking the pocket of consumers up and down this country Ed Mayo

But Mr Mayo said the "consumer agenda" kept changing and, echoing the views of Energywatch and the regulator Ofgem, he took a particular swipe at the energy industry.

"Closed and protectionist European energy markets can end up picking the pocket of consumers up and down this country, and that's one of the things we will campaign on."

Mr Mayo outlined how he might act in the future.

"We have investigative powers, the ability to explore complaints of general interest across the economy, so we are a watchdog with teeth."

"And we have the power to ask for information from companies on specific issues of consumer concern."

Mr Mayo suggested he would soon start asking some searching questions of industries where prices "have almost the reverse of gravity."

"They go up, but when it comes to coming down they are much slower," he said.

"In a number of areas we have got quite sticky markets, in the mortgage market, and we are seeing it in petrol prices on the forecourt, and energy markets," he added.

Complaints

Mr Mayo's concerns were backed up by the consumer affairs minister Gareth Thomas.

He said Consumer Focus would have a much wider remit than its predecessor organisations.

"It will be able to look at more wide ranging market trends and see the bigger picture as well as handling individual concerns," he said.

"We think key areas for Consumer Focus to look at will be competition in energy markets, the fuel poor, helping people who are vulnerable to disconnection or who have already been disconnected," he added.

Alongside all this, new Ombudsman services will be established to resolve energy and postal complaints.

They will be able to impose their decisions and order compensation, rather like the Financial Ombudsman Service.

When asked whether this will make much of a difference, Mr Mayo points to the successful campaign in the 1990s against the car industry's artificial restrictions on importing cheap cars from abroad.

Cars are now cheaper than they were, and Mr Mayo hopes his organisation will have the same effect on energy bills.