Assessing consumer sovereignty

How, then, can we explore a consumer sovereignty perspective on accountability and contrast this with the other two perspectives on accountability? Four broad tools of account-holding can be distinguished. Accordingly, this toolbox consists of voice, choice, representation and information. Different administrative doctrines (that is, consumer sovereignty, citizen empowerment or fiduciary trusteeship) have different ways to provide different instruments that would be defined as 'voice' or 'choice' (see Lodge 2005). Table 11.2 points to the ways in which accountability devices can be linked to different parts of the 'toolbox'.

The toolbox takes on a distinct shape when applying a consumer sovereignty perspective. It makes the case for choice in the sense of allowing consumers to exercise options between services or (bundles of) goods. Such choice options may appear controversial or problematic for some regulated services (for instance, water), but less for others. The 'acceptability' of choice may change over time in that views about

Table 11.2 The accountability toolbox

Information

Voice

Availability/Requirement to provide for specific

Possibilities to channel input

reports and other types of information

about service to provider

Representation

Choice

Presence of consumer advocacy bodies

Possibility to choose

service/standard/type of

oversight

how risky the exercise of individual choice is will change. For example, in the past the purchase of fixed-line phone sets was considered potentially risky as it was seen as encouraging the introduction of substandard equipment. Such concerns have arguably become redundant. Elsewhere, the mis-selling of complex financial products to vulnerable customers has increased scepticism about how much non-standardized choice there should be for particular financial products.

Second, and related, a consumer sovereignty perspective emphasizes the importance of information in order to reduce potential information asymmetry problems and 'lemon choices'. This requires, therefore, an emphasis on price and quality information. Third, a consumer sovereignty perspective also has a distinctive understanding of voice, namely one that emphasizes rights and obligations, or complainthandling. Less emphasis is likely to be placed on representation, in contrast to those regimes that may advocate an institutionalized role for consumer advocacy groups. Such a toolbox perspective allows the development of a set of indicators that can be used to assess to what extent a particular regulatory regime is accountable in terms of consumer sovereignty or not. Table 11.3 provides an indicator list that is utilized in the later analysis.

Given these different arguments, a number of expectations can be developed about the way in which consumer sovereignty is incorporated. One is that the higher opportunity costs in energy mean that regulators will offer more extensive information than in the area of telecommunications, where markets arguably are more established. A second is that competition authorities with responsibility in utility regulation have less interest in playing a 'consumer champion' role than utility regulators. Apart from such sectoral or jurisdictional differences, one may also expect particular national characteristics to stand out, because of the particular time when these bodies were established, because of governmental priorities, or because of national styles of approaching regulatory issues.

Comparing 29 European countries Approach

How, then, could one go about trying to establish whether regulatory regimes are, to some extent at least, oriented towards consumer sovereignty? The following offers an exploration of two sectors across 29 European countries. Telecommunications and electricity are two sectors in which we can expect a degree of choice to exist. The country selection

Table 11.3 Accountability toolbox and indicators

Emphasis under consumer sovereignty doctrine

Contrast to other perspectives

Indicators

Voice

Complaints & redress

Contrasts with reliance on institutional actors to represent consumer views or maximizing participation in decision-making

Complaint lodging & consumer rights

Choice

Low-cost provision of choice

Contrasts with electing regulators or politicians

Information and/or direct exercise of choice possible

Information

Price and quality information

Contrasts with reporting requirements vis-a-vis parliament and other political actors or maximizing information towards citizens

Quality of service and price information provision

Representation

Limited importance, at best interest in using public interest groups as 'fire alarms'

Contrasts with ideas advocating institutional forms of consumer representation, within agency or decision-making provisions or with ideas that rely on 'mandating' representatives

Direct link to consumer advocacy groups

is based on the membership of two pan-European regulatory bodies, the IRG (Independent Regulators Group) for telecommunications and the CEER (Council of European Energy Regulators).

This study utilizes a web-based research strategy. There are a number of ways in which one can conduct a web census, even over time

(Petricek et al. 2006). Rather than relying on 'crawling' software (which would browse websites over time), this study is limited to a snapshot of regulatory regimes at one particular moment in time (mid-June 2012). The research strategy is based on one simple question: can an Internet user find particular information across the different indicators, noted above, within three clicks? This strategy places the individual user at the heart of the accountability of the regulatory regime. Therefore, the empirical question is whether users can easily acquire comparative information about some performance, and whether they can respond to this information by exercising the exit or voice option.

Why rely on a 'three clicks' web census? It is widely said that a 'good' website needs to offer users a direct pathway to potential requests and that users are frustrated if navigation requires them to undertake more than three clicks to find the information they require. Thus, in the following, the 'three click' requirement is used to assess to what extent different regulatory regimes are accountable in 'consumer sovereignty' terms or not.

Such a search allows for two different approaches. One is to rely on a simple web search engine (that is, 'Google') search. The second is to start with the relevant regulator and then to search for information regarding the above indicators. This paper limits itself to the latter approach by starting from the national regulator's website. It might be argued that starting with the regulator as an entry point displays the same bias as earlier analysis on accountability in particular and regulation more generally: it gives far too much credence to the idea that regulatory agencies are at the heart of regulatory activities. However, as economic regulators in particular are supposed to be about market liberalization and to be 'customer champions', it is assumed that users will regard the regulator as a potential source of information and switching arrangements in the light of fears regarding mis-selling by private actors. Finally, it reduces the potential error that may be induced by searching for the 'wrong' words in a search engine-driven research strategy.

The current analysis is limited as it relies on a single individual (that is, the author of this chapter) conducting online searches, usually also relying on Google's translations of the respective websites. Only a few regulators offer websites in multiple languages, a prime example being Austria. Incidentally, this lack of representative accountability provisions (that is, the absence of websites in multiple languages) may be seen as an indicator of low-quality consumer sovereignty-related accountability in an age of multilingual populations and possibly different degrees of web-access and/or cultural interest in engaging with particular media to exercise choice or access information.

A more comprehensive undertaking would have used a number of native-language researchers (it is unlikely that a web-crawling approach would have offered any benefits). Some countries or sectors could not be included as their websites could not be translated and their English versions remained underdeveloped (Greece). In other cases, the study looked at bodies in the process of organizational merger (the Netherlands, although here the specific consumer-related website already foreshadowed the merger that was completed in January 2013) or termination (Denmark's telecommunications regulator - the subsequent regulator, the Danish Business Authority, did not play much of a role either). In other words, this study can be no more than a snapshot. This study does not include information regarding actual market developments and formal legal provisions. Additional analysis might also contrast a consumer sovereignty-informed perspective with the ways in which 'formal' or mandatory accountability is incorporated into regulatory regimes (see Koop, this volume). However extensive these limitations, the key argument is that we should move away from a sole focus on formal accountability mechanisms and explore a more diverse set of mechanisms.

 
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