Much of this year has made for grim reading for consumers. Damning market inquiries into energy and banking found people were paying more than they should be and businesses were not working hard enough to win and keep our custom. Trust in train operators has slumped following eye-watering delays, inadequate refunds when things go wrong and poor service. And the reduction in value of the pound is likely to mean that prices rise.
The vote for Brexit was seen by many as a rejection of big institutions and big business – the cry of a public battling to be heard and often feeling let down by essential markets. It is clear something has to change.
The prime minister’s very public commitment, reinforced during her speech to the Conservative party conference this week, that customers’ views should be heard and should be represented at the boardroom table, is a welcome step in the right direction. She went even further, challenging the culture of business by pledging to “set the market right” in areas where “companies are exploiting the failures of the market in which they operate”.
So my question is: why stop at the boardroom? Any solution to bring about a wholesale shift in this culture needs to do much more than simply co-opt Joe Bloggs on to a board – that alone will not deliver the kind of change throughout an organisation that will ensure businesses really are operating in a way which puts their customers first.
If we’re going to see an end to the mis-selling scandals and poor customer service that have blighted many industries over the past 10 years, and are to move to more competitive markets that deliver good outcomes for consumers, then corporate culture must get an overhaul.
Markets work best where the competitive processes deliver for both consumer and business – but often this alone is not enough, or is not delivering fast enough to satisfy consumers.
Shifting the culture is most important in regulated markets – such as financial services or rail – which all too often have low levels of customer satisfaction and trust, and poor service. That’s why Which? is currently working with regulators across these essential markets to test how “customer challenge groups” could help.
A customer challenge group tests and challenges the ways in which a company responds to its customers and reports its findings to the board, which can act on the insights to deal with problems early and deliver a better quality of service. If this group reports that a firm is not shifting its culture and considering consumers properly, then this should raise the risk of more costly regulatory or government intervention.
It’s an idea that has been very successful in the water sector, where people have no choice of provider but where firms are now far more focused on the needs of consumers and are able to define for themselves what is the right thing to do rather than rely on the regulator to tell them.
So why shouldn’t other essential services such as banks, energy companies, mobile-phone operators and train companies follow this lead to ensure they are driven by the needs of their customers?
It was disappointing that the Competition and Markets Authority inquiry into banking did not address the deep-seated issues, and the Financial Conduct Authority now needs to work with banks to involve customers in changing the culture of the industry. We think direct engagement from a customer challenge group is the best way to do this.
Following the Conservative party conference, the prime minister and the government must make good on their pledges to facilitate a wholesale shift in the culture of big business and to ensure proper representation for the public.
