Regulatory Models for Consumer Bodies: A Report for the Consumer Council for Northern Ireland Prepared by David Stubbs December 2013 1 TABLE OF CONTENTS EXECUTIVE SUMMARY.......................................................................................... 4 1 INTRODUCTION AND BACKGROUND ...................................................... 6 About the Consumer Council for Northern Ireland (CCNI)........................................................ 6 About David Stubbs ....................................................................................................................... 6 Background to this report ............................................................................................................. 6 The scope of this analysis ............................................................................................................ 7 General approach to this study .................................................................................................... 7 Method ............................................................................................................................................ 7 The structure of this report ........................................................................................................... 7 2 THE ANALYTICAL FRAMEWORK FOR THIS REPORT ........................... 9 Introduction .................................................................................................................................... 9 The approach to assessing regulatory models .......................................................................... 9 The interaction between competition and consumer interests ................................................ 9 Consumer interests and economic regulation ......................................................................... 10 The role of complaints handling and consumer campaigns .................................................. 10 3 FINDINGS OF DESK RESEARCH AND INTERVIEWS ........................... 12 Introduction .................................................................................................................................. 12 The role of national consumer bodies within the EU model of regulation ............................ 12 Regional or local consumer bodies ................................................................................... 12 The role of consumer bodies at European level....................................................................... 12 International models of regulation ............................................................................................. 13 Consumer representation in the UK .......................................................................................... 14 Ministries responsible for consumer affairs ....................................................................... 14 Other Public agencies ....................................................................................................... 14 UK Consumer bodies ........................................................................................................ 14 Complaint boards .............................................................................................................. 15 Self-regulation bodies ........................................................................................................ 15 Enforcement/redress bodies ............................................................................................. 15 The Ombudsman Service.................................................................................................. 15 Consumer representation in the Republic of Ireland .............................................................. 16 The National Consumer Agency........................................................................................ 16 Economic regulation and the All-Island project.................................................................. 16 Consumer arrangements in Northern Ireland ........................................................................... 17 A unique framework ........................................................................................................... 17 Economic geography ......................................................................................................... 17 Energy markets ................................................................................................................. 17 Economic regulation of energy markets ............................................................................ 17 The role of CCNI .............................................................................................................. 177 Key areas for potential consumer detriment for Northern Ireland ......................................... 18 Institutional and civic arrangements .................................................................................. 18 Infrastructure patterns and population distribution ............................................................ 18 Market size and competition ............................................................................................ 188 The effectiveness of current arrangements .............................................................................. 19 2 Effectiveness of consumer engagement procedures ........................................................ 19 Effectiveness of information actions .................................................................................. 19 Effectiveness of complaints handling processes ............................................................... 20 Effectiveness of representation in policy areas ................................................................. 21 Effectiveness of consumer campaigns .............................................................................. 21 4 THE COSTS AND BENEFITS OF CURRENT ARRANGEMENTS .......... 23 Introduction .................................................................................................................................. 23 Approach ...................................................................................................................................... 23 Costs of CCNI for energy and water sectors ............................................................................ 23 The proportionality of these costs……………………………………………………………24 Benefits of CCNI ........................................................................................................................... 24 Savings for consumers achieved through the policy process ........................................... 24 Energy and water price controls and saving for consumers ............................................. 25 Improvements to the process of competition ..................................................................... 27 Broader economic effects ........................................................................................................... 27 Input output calculation for electricity, gas and water sectors ........................................... 27 Key assumptions in the analysis ....................................................................................... 28 Findings from this cost benefit analysis ............................................................................. 29 The costs and benefits of alternative options .......................................................................... 29 Setting up a new consumer body outside government ..................................................... 29 Merge consumer representation into a non-government advice body .............................. 30 The experience of new arrangements in GB ............................................................................ 30 5 CONCLUSIONS ........................................................................................... 32 Introduction .................................................................................................................................. 32 Main conclusions ......................................................................................................................... 32 ANNEX ONE: COMPARATIVE CONSUMER ARRANGEMENTS ..................... 34 Introduction .................................................................................................................................. 34 European Consumer bodies ....................................................................................................... 34 Denmark ............................................................................................................................ 34 France ................................................................................................................................ 35 Germany ............................................................................................................................ 38 Italy .................................................................................................................................... 40 The Netherlands ................................................................................................................ 41 Portugal ............................................................................................................................. 43 Sweden .............................................................................................................................