Update from Citizens Advice Head of Policy (Consumer and Public Services)

If you can get past the Brexit blanket, there’s a lively debate on about how society manages the services every household must buy.

Citizen services, in other words, including energy, telephony, broadband and banking.

And the big issue is loyalty. 

Loyalty as in how suppliers treat people who can’t, or don’t, behave like real consumers shopping around and changing supplier to get a better deal.

Citizens Advice is deeply involved.  So well done Matthew Upton for a timely 5-minute read on why regulators must be more determined.

Matthew says “As a consumer advocate, we think that markets, with the right safeguards and protections, generally produce good results for people.”

At CARBS we agree.  We strongly support the Citizens Advice campaign for fair energy prices.

But the essence of markets – why they can be such a force for good – is that they depend on self-interest.  Adam Smith, the economist credited with this insight, said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

So (apologies for stating the obvious) in a market the supplier will be loyal to her customer only if it’s in her business interests.  And she will be right because that’s how markets work.

All markets create winners and losers among suppliers and customers.  Mostly this is uncontroversial.  But in markets for ‘citizen services’ civilised societies set rules for the scale of winning  and losing and how the game is played.

Matthew is right to highlight the “right safeguards and protections” and call time on the loyalty penalty.  In these markets free competition isn’t enough to produce good results.

It’s not so much that the markets are failing as the regulators and lawmakers acting as referees.  Until recently, they didn’t see, or didn’t acknowledge, what was happening and lost control of the game.