Can Customers help regulators step back?
Customer Stewardship Australia provides a framework to re-centre owners, operators and regulators back to what is important, the customer and the community they come from
Infrastructure in Australia is heavily impacted by economic regulation imposed by state and federal governments. Much of the current practices around Australia focuses on the relationship between the regulator and the regulated with the near-exclusion of customers.
Dr Ron Ben David, Special Adviser to Customer Stewardship Australia and recent past Chairman, Victorian Essential Services Commission has observed that even though economic regulators are keen to comply with their statutory obligations to consult publicly on their proposed decisions, customers rarely have the time or capacity to engage in these largely technical processes. As a result, customers have typically been seen as largely passive recipients of regulated services and regulatory decisions.
More recently, regulators have redesigned their consultative processes here and abroad in an attempt to bring a stronger consumer perspective into their decision-making processes. This has involved establishing consumer reference groups; challenge panels or a professional consumer body says Ben-David. While each approach differs in its design, most share the goal of trying to expand the previous bilateral process into a tripartite discussion. Without doubt, it is noble of regulators to invite customers into the regulatory ‘tent’. What Ben-David has asked is whether any healthy minded customer would really want to be in that ‘tent’?
In reality, these regulator-inspired efforts don’t bring customers directly into the regulatory tent. Members of these customer boards, panels and bodies are almost always appointed by the responsible regulator based on their interest and capacity to engage with the regulatory process. In this sense, they cannot be said to be typical customers. Moreover, members are not appointed to represent themselves but to represent customers-as-a-whole (or a particular cohort of customers – eg. vulnerable households, tenants or small business). Members of these bodies are therefore only ever acting on their impressions of customers’ interests. No matter how well informed it might be, representative impressionism is merely that. It involves one group of people representing their impression about the interests, priorities and concerns of other people. It unavoidably leaves customers’ interests indistinguishable from the interests (and agendas) of those seeking to do the representing.
Mitigating risks of re-regulation
…. only customers can represent their own interests. This means the onus must lie with regulated service providers (and not regulators) to discover and satisfy those interests – as would occur through competitive processes elsewhere in the economy. The better that process of discovery is, the less is the need for regulators to act out that process on behalf of customers. .
Currently the topic of customers and stewardship are high profile issues in Australia and around the world. The revelations of the Hayne Royal Commission into financial misconduct have demonstrated the significant failing on the part of the banks and financial advisers in their dealings with customers. The fallout from this breakdown of institutional trust is not be confined to financial services. The performance of other regulated sectors such as infrastructure in meeting the needs of their customers is increasingly under scrutiny as these sectors fail to meet community standards of conduct. This has recently resulted in, for example, governments significantly increasing regulation in the energy sector.
In this context, it is essential that the broader infrastructure sector steps-up and is more proactive in improving its customer stewardship so it is in a position to demonstrate its performance to external stakeholders. In fact, it is through being authentic, plain speaking, championing straightforward concepts and disclosing supporting data that shows interactions with customers are identifying and delivering outcomes they value.
Going forward, increasing the focus on, and commitment to, customer stewardship through more transparent reporting, coupled with independent accreditation and rating system of Customer Stewardship Australia will help your organisation deliver strong commercial advantage and customer trust together; when that is achieved consistently over time a compelling case will exist for regulators to step back
Customer Stewardship Australia will help your organisation deliver strong commercial advantage and customer trust together; when that is achieved consistently over time a compelling case will exist for regulators to step back