The Competition and Markets Authority (CMA) has published a new paper setting out the key findings from its programme of work on vulnerable consumers.

The programme of work included research and discussions with a range of organisations including Age UK, Citizens Advice, the Joseph Rowntree Foundation, Mental Health Policy Institute and Scope.

The paper examines what is meant by consumer vulnerability, research and discussions to consider the challenges faced by different types of vulnerable consumer in engaging with markets, evidence on market outcomes, and what can be done to help overcome these challenges.

Introducing the paper, Andrew Tyrie, CMA Chairman said:

“One of the most informative aspects of the CMA’s work has been the in-depth research we have conducted with people on low incomes across the country, to improve our understanding of the 3challenges they face.”

“Hearing about their experiences, and the diffculties they face in getting a fair deal in a range of markets, provides a very salutary reminder that, in assessing how well markets are working, it’s the experience of millions of people using them that counts.”

“….There has been a widespread erosion of trust in markets, and the CMA and other regulators can and should be playing an important role in arresting and reversing that loss of trust.”

The paper makes an important distinction between ‘market-specific vulnerability’, which can affect anyone in certain contexts, and ‘vulnerability associated with personal characteristics’. The latter captures the idea that individuals with certain characteristics may face particularly severe, persistent problems across a range of markets.

Experience of vulnerable consumers in energy markets

The paper makes particular reference to the experience of vulnerable consumers in energy markets, pointing out that “businesses are able to exploit these vulnerabilities to charge consumers higher prices – a clear example of this occurring was in the energy market.”

An investigation by the CMA found that around 70% of consumers were on highly expensive default tariffs, resulting in consumer detriment of almost £2 billion in 2015.

The paper points out that the regulators for energy (Ofgem) and water (Ofwat) must “have regard to the interests of individuals who are disabled, chronically sick, of pensionable age, on low incomes or living in rural areas”, coupled with further flexibility for considering the needs of other vulnerable groups as necessary.

Referring to work by Ofwat and Ofgem conducted through the UK Regulators Network, the CMA says there is a role for regulators to facilitate data-sharing across regulated markets, in order to make it easier for vulnerable customers to access the services they need.

The regulators have launched a pilot vulnerability data-sharing programme in the North West of England which aims to make better use of water and energy company customer data with a view to identifying customers in vulnerable situations.

The pilot, which is now being rolled out beyond the initial pilot region, includes the creation of a joint priority services register to avoid vulnerable customers having to register on multiple occasions with different suppliers

A progress report published by the UKRN in November 2018 showed that, while there were practical challenges such as rolling out staff training, there had been “significant progress towards cross-sector data-sharing.”

The CMA paper also flags up the role for regulators to play in enhancing reputational incentives – for example, by publishing information on company performance in the form of league tables. “This sort of approach is designed in essence to increase the reputational benefits of acting fairly towards their vulnerable consumers,” the paper says.

Looking ahead, the paper says that consumer vulnerability will continue to be a priority focus for the CMA in the future. The Authority will be looking to improve its evidence base, notably through conducting a feasibility study of a data matching programme that will help the CMA and regulators understand which consumers need greatest support across a range of markets.

The CMA said it would also continue to make the case for legislative change to strengthen its role in helping vulnerable consumers.

Click here to download Consumer vulnerability: challenges and potential solutions

Click here to access summaries of the events held and research commissioned as part of the programme of work on the CMA vulnerable consumers page.