Essential Services, Essential Oversight: Building a better regulatory framework to protect those who need it the most

Man looking at a laptop

Here at Citizens Advice our data means we can see — in real time — the impact of the choices of decision makers. This often means we, rightly, focus on improvements by the UK Government. But we can also see that many of the issues our clients face could have been prevented with effective regulation — particularly in essential services. This blog is part of a short series to shed light on the pivotal role that regulation plays in ensuring essential services deliver for consumers.

Essential services are lifelines. But history has shown us that without careful oversight, essential service firms can let the pursuit of financial returns overshadow work to prevent harm to their customers. This is an issue for all consumers, but particularly those who need protection the most. In regulatory language, this group is called “consumers in vulnerable circumstances”. This term covers a large group of people. What they have in common is that, due to the interaction of personal, market or economic factors, they are especially susceptible to harm when a firm is not acting with appropriate levels of care to deliver an inclusive service. This is where the role of regulators becomes particularly crucial — ensuring that markets work for everyone, not just those who are cheap or easy to serve.

Regulators can act to make firms put their customers at the heart of everything that they do. This involves swift action where rules are broken, inclusive design principles, and a proactive stance in ensuring that individuals receive the support they need. Unfortunately, our work has shown that within essential services, issues have sometimes grown unchecked until they reach crisis point. Only then do regulators intervene, attempting to close the protection gaps that have already caused considerable harm. This approach to regulation allows systemic issues to fester, disproportionately affecting those who need the most support. It’s a scenario where regulatory bodies play catch-up, addressing symptoms while the underlying problems created by firms persist or, worse, escalate.

There are 3 core areas where regulators must act to secure the best outcomes for consumers in vulnerable circumstances.

1. Physical access to the networks and physical products that ensure the delivery of essential services — pipes, wires and technology. In the cases I see here at Citizens Advice, that’s people who don’t have reliable internet able to be able to get in touch with firms, people who have seen their local free cash machines disappearing or whose local shop has shut down so they can’t top up their prepayment meter. Regulation needs to be in place to make sure that customers still have access to necessities when access is reduced. This means further action like what we have seen to try and secure better access to cash and for digitally disadvantaged energy customers to be able to get in touch by phone.
2. Inclusive processes at firms must ensure communications and engagement with their customers reflects people’s needs. This might be ensuring communication is available in British Sign Language or letters provided in braille. This means engaging positively with customers — or those who support them — to identify what needs they have, capture that information responsibly, and ensure they get what they need. Regulators must also be proactively measuring the impact of firms excluding particular demographic groups. We’ve seen action to support parcel delivery firms give people the chance to share their accessibility needs. In the financial services new rules have been introduced to ensure firms understand the diverse needs of their customers. We need to see more of such steps taken across essential services.
3. Unaffordable products cause some of the most contentious debates in essential service regulation. What could, or should, regulators do during a cost-of-living crisis. Regulators can’t put pounds directly into people’s pockets. But they can ensure that the financial support available — such as targeted bill support (1) — is accessible to those who need it and prevent firms from charging excessive amounts. Regulators also have a vital role to play in ensuring that where consumers are struggling to pay debt, they get the support they need to set up a sustainable repayment plan in line with what customers can afford. In the energy sector, we have seen significant new protections brought in to stop people being disconnected by the back door with force-fitted prepayment meters. Regulators must work proactively to ensure essential service providers maintain a basic level of access to services they cannot live without, particularly to consumers in vulnerable circumstances.

The consequences of delayed regulatory action are not abstract. They manifest in the everyday lives of consumers who find themselves at a disadvantage due to no fault of their own. The disappearance of essential services like free cash machines, reliable internet access, and local utility payment options directly impacts those in less affluent or rural areas, further entrenching inequality. When regulators act only in hindsight, they inadvertently sanction a two-tiered system of access and affordability.

There’s an urgent need to ensure that all essential services regulators proactively monitor consumer harms and intervene before significant issues materialise. This proactive approach requires a deep understanding of the harms being faced by consumers, continuous monitoring of market practices, and the foresight to implement protective measures before emerging threats become crises. This means an active and persistent focus on the outcomes of the activities of firms in their respective markets, which is the topic of our second blog in this series.

(1) Targeted bill support such as the Warm Home Discount in energy and social tariffs in water and broadband

This blog is part of a series by Citizens Advice, “Essential Services, Essential Oversight” looking at the role of regulators and exploring ideas which aim to put the consumer at the heart of markets.