This link takes you to a pdf of an OFT report on a thing they've called 'consumer detriment'. I have skim read it and I am in the process of reading it properly - around professional work, running a business, studying for pointless exams and having fun etc.
Now, not only do I lack the time to go through it and respond to (debunk?) it thoroughly, but I also lack all the knowledge I may need. This is where what I think is called 'crowd sourcing' comes in. If by placing it on this open 'blog I can access the intelligence and knowledge of lots of other people I may be able to more quickly construct a more thorough analysis.
Now, I accept that some (all?) of you may think that the OFT is right about 'consumer detriment', and if so fair enough. But for those of you who don't I would much appreciate your thoughts and help.
Lola
'Red Flag? OK, Here's Our White Flag...'
52 minutes ago
18 comments:
I'm really not sure what the document is trying to say. What are we to do with this information?
All it tells us is that a certain percentage of market transactions lead to dissatisfaction from buyers and that the larger the detriment is quantified in money terms, the higher the likelihood of the buyer seeking redress.
Is it actually proposing anything? If so, I missed that part.
Similar to Trooper T.
What's it for? Why, and for whom, was it produced? (unless it was just the OFT attempting to make themselves look useful)
I need to declare an interest - this report is being used by the Financial Services Authority to justify all sorts of interventions in the free market to 'correct' 'consumer detriment'. I have a retail financial advice business which is suffering considerable 'financial detriment' by the FSA - well not me really, our clients as all these costs get passed on.
Some random thoughts -
It's a better insomnia cure than Pentothal.
Survey design looks very suspect to me. Self selecting sample, i.e. subset of those who have complained via Consumer Direct?
If so, I distrust everything in the survey, particularly the extrapolation to the greater population.
Without much more info on the survey design, I'd say statistically meaningless.
Most of it is excruciating slicing and dicing to dubious purpose other than to pad the report with yet more graphs. Death by Powerpoint.
Comes across as rent seeking and justification for existence more than anything else.
I don't think we need to the survey to know that lousy companies give lousy service, or that there is very little customer service culture in the UK.
That said, where is the control group of satisfied customers?
Chuckles. Excellent. Thanks.
(In passing we really do try very hard to give excllent service!!)
Lola,
a. You're welcome,
b. I'd never have thought otherwise... :)
If I were to draw any conclusion from the report, it would be that when a UK company has something go wrong with their service to a customer, they are not very good at either putting it right or recovering the situation/goodwill.
That of course, is hardly news.
On the FSA side, I'd either get, or threaten to get a competent statistician to give it the once over. That should put the wind up them fairly quickly.
Link down at the moment. Maybe you've broken their report already :)
OK, Lola, #1. "Consumer Detriment" is a phrase coined by the OFT in response to the Injunctions Directive.
The UK has to implemement this, but the word "detriment" is not in it. It talks about the "Collective Interests" of consumers, which is correctly transposed as "collective interests" into the The Enterprise Act 2002 (sections 211 and 212, domestic and community infringemets).
So first up, one could perhaps argue that this (is it peer reviewed and by whom?) 2008 paper is 'soft law' and an example of 'gold plating' that is against the Coalition Agreement and government policy.
Second, any competent government economist is going to claim that there is an "information asymmetry" between consumers and business in relation to financial services. They might also claim "bounded rationality" meaning that consumers are not rational when buying financial products.
They can claim these as reasons that there needs to be regulatory intervention in terms of mandatory disclosures etc. in order to avoid "market failure".
Is this the point in the exercise? Which FSA consultation are we talking about?
Page 16:
32% of complaints were about utilities (including banking, post and internet). This info is out of date. What are the total complaints received at:
a) Consumer Direct
b) Consumer Focus (postwatch and energywatch)
c) The Financial Ombudsman
For 2010/11?
The FSA, although specificed enforcers for the purposes of the Enterprise Act 2002, seem to choose not to enforce it.
Put an FOI request into the FSA asking them how many:
a) "Consultations" under S214 of the Enterprise Act 2002 they have entered into
b) "Undertakings" under S219 of the Enterprise Act 2002 they have received
c) "Enforcement Orders" under S217 or S218 of the Enterprise Act 2002 they have been granted.
I think the answer is zero.
The FSA works under the principals contained in the FSMA2000, this states uses the word "appropriate level of consumer protection" not "collective interets of consumers" as per the injunctions directive.
The FSA in their product intervention stuff define "consumer detriment" as "Consumer loss due to breaches of our rules or the wider duty to act fairly and reasonably".
Although traders do have a generaly duty to trade fairly under Directive 2005/29/EC, again, "consumer detriment" does not feature. Whilst consumer protection in terms of financial services is not subject to EU maximum harmonisation, this seems to be another examp,e of gold plating.
Ask them why they can't just transpose the requirements of directive 2005/29/EC into their rulebook - in fact hell, ask them if they have even considered the option of doing this, instead of just making up rules then claiming "consumer detriment" if they are breached.
What are they doing about "gold plating"?
They seem to be banging on about "high profile cases" (I'm guessing penalty charges and PPI mis-selling etc) of "consumer detriment.
Seriously, ask them why stinging people with massive penalty charges and sending them spiraling into the red for going a couple of pence over their overdraft is not already a breach of the provisions on Directive 2005/29/EC
Ask them why mis selling PPI is not a breach of Directive 2005/29/EC
Ask them what work they have done on transposing ths directive into their sourcebook.
Ask them why they are using langauge about the injunctions directive, and they are specified enforcers of it via the Enterprise Act, they have chosen not to use it to correct these problems when they happened.
Ask them if PPI mis selling was a breach of the old Trade Descriptions Act 1968, and then the Consumer Protection from Unfair Trading Regulations 2008 and if so, why did they not use their 'specified enforcer' status under the Enterprise Act 2002 to achieve compliance?
Ask them why they do not consider that the FSMA2000 reference to an appropriate level of consumer protection simply means using the powers Parliment have already granted them to enforce the full range of consumer protection legislation against financial services companies?
Ask them why they have never considered using these powers when the complaints are actually coming in?
Accuse them of 'gold plating' and ignoring EU directives on the protection of consumers basically.
Ask the how many FSA staff are trained to enforce Part 8 of the Enterprise Act 2002.
Ask them if they consider PPI mis selling 'fraud' under s2 or s3 of the Fraud Act 2006.
Ask them how many complaints against entities they regulate they have made to the Police or SFO in respect of 'fraud'?
SL, you are on fire today!
Sl - wow! I shall now have some fun. Thank you very much
Crowd sourcing is the way to go! By the way, I don't think that link is working for me right now... anywhere else I can go to see it? Thanks!
-Jackie
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