A good article in The Guardian about the decision by Ofwat to fine Severn Trent £35.8million. Britain's second-largest water company is to be fined for supplying false data to the regulator and providing poor customer service.
There are also links into articles about the activities of some of the other regulators and a piece considering the effectiveness of the regulation process. (See below)
Regulators: Performance ratingFair play in a free market? The public takes a sceptical view.
'Industry watchdogs have been baring their teeth in recent weeks with highprofile fines and investigations. But consumer groups remain sceptical about how well they ensure fair play
in a free market that produces high levels of corporate profi ts as well as complaints. Ofgem, the energy watchdog, has been busier than most and yesterday announced an inquiry into the activities of ScottishPower and Scottish & Southern Energy. This follows a formal complaint alleging anti-competitive behaviour relating to the electricity transmission network they own jointly in Scotland. The water regulator, Ofwat, hasslapped a £35.8m fi ne on Severn Trent for providing false data as well as poor customer service. The penalty will be levied on top of what may be imposed by a criminal court under a case brought by the Financial Services Authority over the false data.
Those moves come weeks after Ofgem imposed a £41.6m fine — the highest ever in the energy sector — on National Grid for restrictive contracts that held back developments. The regulator also launched two investigations into the way markets have been operating. But some consumers have been sceptical about whether these headline-grabbing initiatives add up to much. Regulators have denied persistent allegations that they act only when pressed by rival utility firms, service users or politicians . A series of reviews of supermarkets by the Competition Commission — three in the past eight years — failed to conclude anything other than that the companies are acting fairly.
Ofcom, the communications-sector regulator , is also seen as relatively ineffectual, doing little to tackle consumer problems with broadband companies or to break Sky’s powerful grip on the pay-television sector. llan Asher, chief executive of the onsumer group energywatch, said
watchdogs had become obsessed ith a “better regulation” agenda that emphasised less intervention rather than more. “This is good procedure but a poor goal and it led to Ofgem
voluntarily reducing its own budget and taking its eye off the market .
“It was only a few weeks ago that Ofgem was persuading the government that the markets were
beyond reproach but since then it has initiated a range of actions in the face of price rises and market abuses.”
The one ray of hope has come from the Financial Services Authority, which cracked down on rogue selling and other abuses under “treating customers carefully” provisions. The
recent admission that it mishandled the Northern Rock crisis has left many feeling the next inquiry should be into the regulators themselves.'
Think about the role of the regulator. Do the examples suggest that they are as effective as they should be? Is there evidence of 'regulatory capture'?
The water and sewerage industry should be opened up to competition, says regulator Ofwat. Competition was "severely limited by legislation" and had "not developed successfully", said Ofwat, the regulator in England and Wales. Opening up the sector would help it address climate change and water scarcity, as well as lower costs. Ofwat said it would challenge firms on price and service until competitof the syatem by whichion was "strong enough to protect customers".
