As part of the government’s plan to halve inflation this year, the Chancellor chaired a roundtable with CEOs from the Competition and Market Authority (CMA), Financial Conduct Authority (FCA), Ofcom, Ofgem and Ofwat.
Jeremy Hunt made clear his expectation that regulators work at pace to guarantee markets are working properly. With wholesale energy prices and other input costs now beginning to fall – the Chancellor also wants to ensure consumers benefit from these reduced costs.
During this current period of high inflation and interest rates, this also includes ensuring higher interest rates are passed on to savers.
Chancellor of the Exchequer Jeremy Hunt said: “I am pleased we’ve secured agreement with the regulators to act urgently in areas where consumers need most support to ensure they are treated fairly.
“We are working hard to halve inflation this year and return to the 2 percent target. Businesses must play their part too and I will keep a watchful eye on the progress they make.”
The Chancellor also agreed a new action plan with the regulators to support consumers, particularly the most vulnerable:
FCA have agreed to:
- Deliver better deals for savers by driving competition, including reporting by the end of July on how the savings market is supporting savers to benefit from higher interest rates. The Government fully supports the FCA’s review and the new Consumer Duty gives them stronger powers to take action if necessary.
- Require the largest banks and building societies as part of this to explain the pace and extent of their pass through of interest rates, and how they are proactively supporting savers to switch to high interest rate products.
CMA have agreed to:
- Deliver a better deal for motorists by publishing their review of the road fuel market, which examines profit margins in supermarkets and other fuel retailers, on Monday. This will include the impacts on vulnerable consumers.
- Help shoppers pay fair prices by bringing forward their update of competition and unit pricing in the grocery sector to earlier in July and laying out next steps. This will include further scrutinising the food supply chain as well as measures to make it easier for consumers to make the best choices.
- Following affordability pressures in the housing market, provide an update on their housebuilding market study and work in the rented accommodation sector in August.
- Actively scrutinise markets where cost-of-living pressures are growing and launch work in at least two new areas the CMA considers in need of further investigation. It will also update on key developments in its ongoing crackdown on misleading consumer practices.
Ofcom have agreed to:
- Take action to push suppliers who have yet to introduce social tariffs (discount deals for vulnerable customers) to offer them in the broadband and mobile markets, as well as waive fees for any customers who want to switch providers to access a social tariff.
- Push suppliers to take immediate steps to raise awareness of existing social tariffs and drive consumer take-up. Ofcom will work with government and other relevant bodies to support industry efforts.
- Publish a report on its current review of in-contract prices to ensure consumers are sufficiently aware of what they are signing up to by the end of the year. This will consider whether Ofcom’s rules need to be strengthened. Ofcom will also publish an update on its full range of work to support consumers in July.
Ofwat have agreed to:
- Crack down on water companies not going far enough to support customers to pay their bills, access help and repay debts. This will include assessing water company compliance with Ofwat’s Paying Fair Guidelines, and where companies’ approaches are found to be insufficient, setting out clear actions for improvement in July. Next year, Ofwat will also set out clear and binding license conditions for every water company on how to treat their customers, including customers in vulnerable circumstances.
- Hold water companies to account over delivering existing social tariffs for those unable to pay water bills, as well as allowing consumers to apply for payment holidays and offering support to those on low-incomes.
- Ensure targeted support for vulnerable customers by improving data sharing, such as those struggling with bills (along with Ofgem).
Ofgem have agreed to:
- Ensure all suppliers are passing falling prices onto consumers, keeping the price cap formula under review to ensure that it mirrors the costs facing suppliers. The new lower cap from 1 July will reduce a typical annual household energy bill by £426.
- Strengthen protections and support for the vulnerable by mandating the Code of Practice on prepayment meters and ensuring that suppliers are able to offer Additional Support Credit (ASC) to PPM customers in need. Both are subject to Ofgem consultations launched today.
- Take action against suppliers that have over-charged business customers and publish its review of the non-domestic market this Summer.
- Scrutinise supplier finances as the sector begins to move from loss making back into profit. The regulator and government moved quickly to stem losses and protect consumers when prices were rising sharply and expects suppliers to act responsibly and in the interests of their customers as prices fall and profits return. This includes ensuring they deliver good service standards and support the most vulnerable customers. Those who are not yet meeting new capital requirements should retain profits rather than pay out dividends.
Regulators agreed to provide regular updates to the Treasury on their progress and that a follow up meeting would be held later this Summer. The FCA, Ofcom, Ofwat and Ofgem will also publish a joint statement to set shared expectations on treatment of customers in financial difficulties.
As part of wider discussions with the Governor in the context of high food inflation, the Bank of England is reviewing CMA data and meeting with the food sector, with analysis included in the August Monetary Policy Report and/or the minutes of the August meeting.
The meeting with regulators on what more they can do to support people through a period of high inflation comes while the government continues with its plan to halve inflation this year and support the Bank of England in taking difficult decisions to return to the 2 per cent target.
Commitments from regulators to make sure consumers are not being exploited build on one of the largest cost-of-living support packages in Europe which has been rolled out to help the most vulnerable, worth £3,300 per household on average over this year and last.
This includes paying half of a typical household energy, direct cost of living payments to the most vulnerable and increases to benefits, state pensions and the National Living Wage of around 10 per cent.
The CEOs attending were:
- Ofcom (telecommunications) – Dame Melanie Dawes
- Ofgem (energy) – Jonathan Brearley
- Ofwat (water) – David Black
- Competition and Market Authority (CMA) (competition/consumer) – Sarah Cardell
- Financial Conduct Authority (FCA) (financial services) – Nikhil Rathi.
