Contents

Executive summary

Chapter 1 – Role of consumer protection policy reviews

Chapter 2 – The guidelines: methodology for consumer protection policy reviews

Chapter 3 – Consultation questions and stakeholder responses

Annex A – Oftel strategy principles applicable to consumer protection policy reviews

Annex B – Consumer protection policy review: indicative forward timetable

Executive summary

S.1 While Oftel already has guidelines to review regulation of markets according to the level of competition, Consumer Protection Policy Review (CPPR) guidelines provide an explicit framework for Oftel to review consumer protection regulation. The guidelines are flexible and designed to encompass a range of consumer, economic, legislative and technological issues when reviewing consumer protection policies.

S.2 Consumer protection policy is defined to include actions taken to protect consumers irrespective of the level of competition in the market place. Consumer protection policies include consumer compliant handling, dispute resolution and consumer information initiatives. CPPRs will be used to review these and other consumer protection policy areas.

S.3 In essence a CPPR is aimed at ensuring that regulation in such areas remains appropriate, proportionate and effective. Importantly the guidelines are designed to provide stakeholders with greater transparency on how Oftel reaches its decisions.

S.4 The Director would expect to follow these Guidelines in most cases. However, it is not lawful for the Director to fetter his discretion as to his future actions. Where the Director departs from these Guidelines, he would normally give his reasons. These guidelines are also subject to developments at EU level and may change or be subject to revision when Oftel becomes part of Ofcom.

Chapter 1

Role of consumer protection policy reviews

Introduction

1.1 In June 2002, Oftel published a consultation document on developing consumer protection policy reviews (CPPR) guidelines. This statement is being published taking account of the stakeholder responses that Oftel has received to the consultation document.

1.2 The purpose of this statement is to outline how Oftel intends to review regulation that primarily relates to consumer protection outside of formal market reviews, which are aimed at identifying whether regulation promoting competition is needed in that market. In essence, these guidelines are to ensure that such consumer protection focused regulation remains appropriate, proportionate and is achieving its objectives.

1.3 Oftel has separate guidelines on how it reviews the effectiveness of its regulation to promote competition and how it addresses anti-competitive practice. There has not, however, until this document, been an equivalent set of guidelines in relation to implementing strategy under the other two Oftel objectives ie 'well informed consumers' and 'adequately protected consumers'.

1.4 The range of areas included under these objectives – which can be broadly termed consumer protection policy – is more diverse than those related to effective competition/prevention of anti competitive practices. There is sufficient commonality of subject matter in relation to consumer protection areas for these guidelines to enable consistency of approach.

Defining 'consumer protection policy'

1.5 Consumer protection policy is defined to include actions taken to protect consumers irrespective of the level of competition in the market place. Consumer protection policies include:

• consumer complaint handling, dispute resolution, customer rights including rights to information;
• generic consumer information initiatives (that are not originated from individual market reviews) eg quality of service information published on a comparable basis;
• actions required of telecoms operators as a class rather than just those with market power and that are not specific to an individual telecoms market eg itemised billing, metering and billing system approvals;
• policies dealing with specific social objectives (eg universal service, low user scheme) to protect groups whose needs would not otherwise be met by the market, or
• privacy of customer information across electronic communications networks eg data protection and calling line identification.

1.6 There are also areas where the reasons for intervention are in relation to wider social objectives, a mix of consumer or citizen protection eg ensuring continuity of telecoms supply in a national emergency or in some cases promoting competition eg network interoperability, numbering. While these areas have other policy drivers, they would not fit easily within a market review. It is envisaged that the proposed CPPR guidelines are flexible enough to accommodate these areas.

1.7 Policy areas that are specifically not covered by CPPR guidelines are those that are covered by obligations to promote competition flowing from market reviews. However while the starting point for analysis may differ between these two types of reviews – consumer protection and market competitiveness – in some cases the remedies pursued may be similar especially in relation to the provision and dissemination of information for consumers. This link is discussed further later in this chapter. It would be envisaged that generally, sector specific consumer protection regulation would only be introduced where there has been market failure, or where competition policy or general consumer law has failed to provide adequate consumer protection.

External drivers for review

1.8 CPPRs will ensure that Oftel has the processes in place through which it can test and, where relevant, justify to external stakeholders the continuing appropriateness of any regulation it undertakes in areas, which are not primarily competition related. They will also allow Oftel to assess the effectiveness of its regulatory actions.

1.9 The Communications Bill emphasises seeking a more flexible and less burdensome approach to regulation in order to achieve public policy objectives. The regular review of existing regulation and its withdrawal where appropriate, is part of the review process. In the future Ofcom will be expected to review existing regulatory mechanisms and assess whether an alternative approach would be more effective.

1.10 Bodies such as the Better Regulation Taskforce (BRTF) and Regulatory Impact Unit (RIU) have been set up by the Government to ensure that the regulations made by government departments, agencies and regulators, are fair and effective. These guidelines have been drawn up in with the BRTF’s principles of better regulation in mind.

New EU Directives

1.11 In formulating these proposed guidelines it is necessary take account of the existing regulatory regime and the new regime that will come into force on 25 July 2003.

1.12 Four new EC Communications Directives (the Framework, Access, Authorisation and Universal Service Directives) entered into force when they were published on 24 April 2002, and must be implemented in the UK by 25 July 2003 (The Communications Data Protection Directive also forms part of the package, but it has a later implementation date of 31 October 2003). The Communications Bill ('the Bill') has now been published and is currently before Parliament. It is intended that the first four new Directives will be implemented in the UK by the Bill, and that Ofcom, the new communications regulator to be established by the Bill, will be responsible for regulation under the new Directives and the Bill.

1.13 It is intended that these guidelines when published towards the end of 2002, will operate under the existing regulatory regime and then carry over when the new regime commences in July 2003. It is Oftel's view that the CPPR guidelines for these reviews are consistent with both legal regimes.

1.14 The implementation of the Directives will see the replacement of the current licensing regime for telecommunications companies with a new approach based on a general authorisation to provide electronic communications networks and services. Existing licence conditions will be replaced by 'general conditions' and 'specific conditions'. Oftel's initial proposals for the 'general conditions' have already been the subject of consultation, see www.oftel.gov.uk/publications/licensing/2002/enti0502.htm. The proposals for 'specific conditions' will be consulted upon separately, predominantly as part of a number of market reviews. Oftel anticipates that its proposals for general and specific conditions for the new regime will be finalised in the second quarter of 2003.

Purpose of consumer protection policy reviews

1.15 Changing market conditions and patterns of consumer behaviour require assessment of the continued appropriateness of regulation. The aim of these reviews is therefore on justifying the continuing of regulation, or seeking a more flexible regulatory approach using self or co-regulatory approaches as necessary, and assessing, whether regulatory withdrawal may be appropriate now or at some stage in the near future. However the outcome of such a review process may also find that regulation is still needed, or indeed may need to be strengthened. The emphasis then is ensuring:

• regulation remains appropriate, proportionate and effective,
• the policy justifications for existing regulation still exist, and if they do still exist, can objectives be met with greater regulatory flexibility or general consumer protection or other laws, and
• the policy objectives regulation needs to achieve are being met.

Links between market reviews and consumer protection policy reviews

1.16 A market review (rather than CPPR) is aimed at identifying whether regulations promoting competition are needed in that market. The purpose of the review is to identify if any of the players in the market have significant market power (SMP).

1.17 Separate from the obligations that may flow from a market review, the new European regulatory regime which will come into force in July 2003, will require the imposition of other regulation such as general conditions. Such regulation is not dependent on the level of competition in the market segment. These areas of regulation either apply across markets or are not scoped or defined in terms of a particular market. As with market segments, proportionate regulation requires that these areas should be reviewed on a regular basis.

1.18 Many areas where Oftel has taken action or enacted a certain policy will obviously contain issues that relate both to competition and consumer protection. In such circumstances the primary reason for regulatory action should be considered (ie to promote competition or ensure consumer protection in its widely defined sense set out above) and should determine whether to use market review guidelines or CPPR guidelines.

1.19 However the two guidelines should not be seen as mutually exclusive. If in the course of conducting either a market review or CPPR, issues arise that are clearly of a competition nature, or would be more properly addressed by the CPPR guidelines, Oftel project/programme managers should use the relevant guidelines to address these issues. The guidelines can be used in conjunction with each other to address issues outside the main body of the review.

Chapter 2

The guidelines: methodology for consumer protection policy reviews

Introduction

2.1 This chapter sets out the basic procedures, principles and framework for carrying out individual reviews. The relevant regulatory principles involved from Oftel's strategy can be identified and a framework for analysis provided. The policy specific details relating to the wide range of consumer protection areas would be addressed during the course of individual reviews. What Oftel aims to provide here is a coherent overall framework. The process of applying guidelines in specific cases should enable the guidelines to be revisited and refined in due course but will follow general principles based on the strategy.

2.2 Oftel has developed a strategy as described in chapter one and, underpinning its strategy objectives, ten regulatory principles to be applied in pursuing these objectives. Excluding those regulatory principles, which relate primarily to issues of effective competition or preventing anti-competitive behaviour, the relevant principles in terms of consumer protection policy reviews are set out in annex one.

Link to Oftel's regulatory option appraisal guidelines

2.3 In conjunction with the development of CPPRs, Oftel has also published its guidelines for regulatory option appraisals. Oftel's regulatory option appraisals make up part of the CPPR review process and like the CPPR guidelines encapsulate existing reviews processes like consumer impact assessments (CIA), regulatory impact assessments (RIA). They also take into account the Office of Fair Trading's guidelines for Competition Assessment (February 2002) and other good practices. Regulatory option appraisals are a way to inform decision-making that can be applied to both market reviews and CPPRs, with criteria differing to the type of review and the issue under consideration.

Consumer interest criteria

2.4 Oftel has used a widely recognised consumer interest criteria based on an expanded National Consumer Council (NCC) list. The criteria are intentionally wide to reflect a range of reasons why regulation or consumer policies may be enacted. The consumer interest criteria presents a basic test within the framework, that is:

• what are the grounds for intervention? ie access, safety, consumer information, etc; and
• why are consumer interest criteria not being met by general consumer protection law or actions by suppliers, or the actions of other parties who are not the sector specific regulator?

2.5 If consumer criteria are not being addressed by general consumer protection law, the industry or other parties, and there is evidence that consumers are not receiving adequate protection, there may be grounds for Oftel to intervene. However, if there are other factors that may address consumer interest in a reasonable timescale, there may be no need for regulatory intervention.

2.6 Many Oftel projects and programmes concerned with consumer protection are reflected in the criteria. Oftel is aware of the subjective nature of the criteria and that different stakeholders will often have different opinions as to what level of 'information' consumers require, or what constitutes 'value for money' for example. It is however useful for the purposes of transparency to state at the outset of a review what the primary consumer interest reason for acting is. It may be that there are additional or secondary consumer interest criteria for taking policy action, if so these should also be identified in the review.

2.7 It will be for Oftel project/programme managers (PPMs) to determine based on the issues and evidence in each policy area how much emphasis and weight to put on the consumer interest criteria. The wideness of the consumer criteria merely reflects the range of consumer protection issues. They are not intended to further expand Oftel’s actions in regard of consumer protection policy. Whilst the guidelines can be used and should be used to review consumer protection issues that arise in different policy areas, the CPPR guidelines are essentially and primarily a set of review guidelines not a vehicle to expand regulation.

Disaggregation of consumer interest

2.8 When conducting a CPPR’s, PPMs also need to ensure that they take into account that different groups of consumers have different requirements and needs. As such polices may impact differently on different consumer groups. This needs to be taken into consideration when reviewing the success and effectiveness of consumer protection policy, or when contemplating a change in policy.

Appropriate regulation

2.8 If the outcome of a CPPR is that regulatory action is required, it would need to meet the test as set out in the Authorisation Directive, that is that any such regulation must be objectively justified, proportionate and non-discriminatory.

Evidence based regulation

2.9 Where a policy option is being contemplated it should be based on as much as is practical a strong evidence base. This applies particularly to introducing regulation, but there also needs to be a good evidential base for withdrawing regulation or when contemplating self and co-regulatory measures. PPMs should take measures to ensure that all necessary information and data analysis requirements are considered at an early stage in the project/programme lifecycle given that policy development and implementation should be ‘evidenced-based’, wherever possible.

Framework for review

2.10 The framework for review includes the following elements:

• criteria which define the 'consumer interest' on a widely recognised basis, which consumers can reasonably expect to obtain and the absence of which can justify some form of regulatory intervention;
• why have consumer interest criteria not been addressed by non-sector specific regulatory sources ie general consumer law?;
• regular review of the current consumer protection policy to see if it meets relevant Oftel regulatory principles;
• recognition of changes which are likely to impact on any existing justification for a policy;
• the need to assess the advantages and disadvantages of proposed regulatory options in these circumstances; and
• the need to indicate the period for which any revised policy is intended to apply.

2.11 The review approach to be adopted is summarised below (see figure 1). The regulatory option appraisal guidelines fit within the CPPR process at step 7 (see below) of the proposed review framework ie identifying and evaluating the costs and benefits of any policy changes needed and pursuing the appropriate policy option.

Figure 1: Consumer protection policy reviews – outline of review approach

Table 1: Consumer protection policy review – checklist

Review outputs and timescales

2.12 Three main outputs are envisaged for each review:

• kick off document setting out scope and timing of review;
• consultation document including assessment of advantages and disadvantages of policy options; and
• statement setting out policy decisions.

2.13 Timescales should ensure that the review process takes no longer than nine months including a three-month consultation period. This is normally the same time period as for a market review. Where regulatory intervention in a consumer protection policy area is a specific legal requirement then it should be possible to condense the length and form of the review process for those aspects and focus on areas where greater discretion over regulatory action is involved. These timings are offered only as general guidance.

Frequency of reviews

2.14 The frequency with which reviews should be carried out should be determined for each individual policy area. As general rule policies should where appropriate be reviewed every two years. No policy should remain unreviewed for more than five years. However these timings are flexible and are offered as general guidance. It is recognised that a range factors, changes in the market, telecoms law, etc, could vary the frequency of reviews.

2.15 While market segments are to be reviewed more frequently than this – normally every two years – an equivalent standard timescale for consumer protection policy review areas does not seem justified. Factors to be considered in setting a timescale for subsequent review should include:

• anticipated changes in technological or markets terms, of services impacting on the extent and adequacy of the consumer protection or other existing policy under review;
• the existence of external timetables for review (eg of EU Directives); and
• anticipated and planned developments at UK and EU level, of general consumer protection law or other statutory or self/co regulatory initiatives that may impact on the policy area in question.

2.16 The extent of any subsequent reviews should depend on an assessment of the degree of change in circumstances since the last review. Experience of reviews on the basis set out in these guidelines (and the extent to which it is possible to condense the review process where regulatory intervention is a legal requirement as discussed under 'review outputs and timescales' above) should reveal whether there is an abbreviated version of the review process which it is appropriate to carry out. Based on existing work areas annex 2 gives an indicative timetable for further consumer protection policy reviews for the next few years.

Conducting a review

Kick off document (internal)

2.17 There are a number of steps that PPMs would follow in carrying out a CPPR. Firstly, an internal document should be circulated to appropriate staff within Oftel outlining the scope and complexity of the review. If initial review work prior to formal consultation is required to determine the appropriate timescale for any formal review, this should be detailed (CPPR guidelines can also be used for initial policy reviews outside a formal review). This paper should provide a summary of the policy/regulation, why it was introduced, what objectives it sought to achieve and the regulatory mechanism by which it seeks to achieve those objectives. Any minimum regulatory requirements should also be stated ie obligations under EU Directives.

2.18 It is at this stage that PPMs should also give initial consideration to any specialist advice that may be required. Legal, technical and economic contacts should be made aware as soon as possible that their input may be required and should be identified in the internal document. Many CPPRs may require market research or other data surveys, especially in relation to tracking changes in customer behaviour. Oftel’s Customers and Markets Unit (CMU) should be informed as soon as possible so that potential market research surveys will have adequate drafting notice.

2.19 If the PPM is aware of any initial issues that may impact on the review ie awareness of changes in consumer behaviour, changes in legislation etc, that may effect how the policy objectives are achieved this should be mentioned in the initial paper. This is not to pre-empt the review but to merely flag any potential issues that may need to be addressed. Key stakeholders that may have particular issues or concerns relating to the policy area to be reviewed also need to be identified. PPMs must also ensure that the advisory committees (ACTs) are made aware of forthcoming reviews and given every opportunity to be involved at all stages of policy development.

2.20 Finally the proposed length of the consultation period and date for publication of the review should be identified. The three month consultation period is the norm, however shorter consultation periods may be acceptable if properly justified ie informal consultations amongst stakeholders have already taken place, a strong body of data/evidence already exists.

Consultation document

2.21 Like the internal ‘kick off’ document, the consultation document should provide a summary of the policy/regulation, why it was introduced, what objectives it sought to achieve and the regulatory mechanism by which it seeks to achieve those objectives. The reasons for the policy being reviewed should also be stated, i.e. policy has not been reviewed for several years, there may have been legislative changes in telecoms law at EU or national level, changes in the market, customer behaviour etc.

2.22 Plans to conduct market research, potential consultancy and what are seen to be the major issues should also be detailed. Consultation questions for stakeholders will also be listed. A range of potential policy options (introduce/strengthen regulation, remove regulation, make use of self/co-regulatory initiatives etc) should be outlined setting out potential advantages and disadvantages in broad terms. The length of the consultation/review period also needs be set out, along with the review checklist. Shorter or longer review periods need to be justified within the consultation document.

Statement

2.23 The statement should contain a summary of the policy decision. The statement should mirror the checklist in setting out the rationale for how a policy decision was reached to allow for maximum transparency ie:

• define the policy area;
• justification for intervention in term of ‘standard interest criteria’;
• why have consumer interest criteria not been addressed by non-sector specific regulatory sources ie general consumer law?;
• what is policy adopted?;
• does it meet Oftel principles?;
• is the policy still needed?; and
• ROA’s to identify advantages/disadavantages of policy options.

2.24 The statement should conclude with a timescale setting out any subsequent review. An appropriate time for review may suggest itself during the course of the review as a number of factors will have been considered ie technological, economic, legal changes and market developments. If market research has been undertaken changes in consumer behaviour may have presented themselves. Review timescales (especially outside the two to five year timeframe as discussed previously) should contain a brief narrative explaining the rationale behind the timing of the next review.

Chapter 3

Consultation questions and responses

3.1 The consultation document on CPPRs was published on 28 June 2002. Responses were received from the following:

• British Telecom;
• Cable and Wireless;
• Centrica Communications;
• Communications for Business (CfB);
• Consumer Communications for England (CCE);
• Disabled and Elderly People Advisory Committee (DIEL);
• Northern Ireland Advisory Committee (NIACT);
• O₂ ;
• Orange;
• T-Mobile; and
• Scottish Advisory Committee on Telecommunications (SACOT).

General

3.2 Overall, the stakeholders that responded to the consultation were broadly supportive of the idea of CPPRs agreeing that consumer protection regulation needs to be reviewed periodically to ensure that the need for it still exists along with ensuring its delivery mechanisms for achieving its objectives are still appropriate.

Do you agree with the need for a more clearly defined framework for assessing what is appropriate for regulation in relation to consumer protection policies which are not primarily based on promoting competition (as discussed in chapter one of the consultation document)?

3.3 The majority of stakeholders who responded to the consultation agreed with desirability of having a framework for reviewing the appropriateness of consumer protection policies. SACOT welcomed Oftel’s intention to undertake CPPRs, however they felt that CPPRs should not just be limited to specific policy areas but that a CPPR should be undertaken covering all of Oftel’s work. SACOT also felt that there is a need to for greater coherency, consistency and cross learning in relation to Oftel’s consumer protection policies. The Northern Ireland Advisory Committee on Telecommunications (NIACT) agreed on the need for a clearly defined framework for ensuring consumer protection issues, but also felt this should be applied across all projects and programmes. NIACT also felt that whilst it supported moves towards ‘light touch’ regulation, it may not always be appropriate and each situation should be carefully considered.

3.4 BT felt that the activities of all providers should be examined under the proposed framework and that any conclusion should be based on consumer detriment rather than market power of any company in relation to consumer protection issues. Communications for England (CCE) and Communications for Business (CfB) welcomed the initiative of setting up a framework. CfB and CCE stated that there would need to be a strong evidence base before withdrawing regulation. O₂ agrees with the principle of establishing and publishing CPPR guidelines in order to evaluate regulatory intervention to protect consumers. However O₂ believe that the use horizontal consumer protection legislation is to be preferred to the use of sector specific regulation.

3.5 As Oftel becomes part of Ofcom, O₂ feel that the emphasis should be on ‘light touch’ regulation as reflected in the Communication Bill. Additionally O₂ feel that the guidelines should not be used to justify existing regulation, advocating instead a 'blank canvas' approach. Centrica welcomed the guidelines and the commitment to regularly review consumer protection policies. Centrica also felt it important that particular aspects of consumer policy be required of all telecoms operators rather than being confined to those with significant market power (SMP) and Universal Service Obligations (USO).

3.6 Cable & Wireless (C&W) agreed with need for a framework for defining consumer protection policy, however C&W felt that telecoms specific consumer protection solutions should only be imposed where competition policy and the market as a whole had not delivered the level of consumer protection required.

3.7 T-Mobile felt that a clearly defined framework to review consumer protection policy was desirable, though the aim of reviews should not just to be to identify whether regulatory intervention was justified or whether the regulation in place was appropriate. T-Mobile favoured a greater use of self and co-regulation where market forces could not be relied upon to achieve aims and where there is a potential for consumer harm.

Oftel comment

3.8 Oftel agrees with ACT’s respondents on the need for a focused and coherent approach to consumer protection policies. However, conducting an Oftel wide CPPR would be a huge exercise not only in terms of resources, but would present problems in terms of the value of any output. Just as market reviews need to assess circumstances in a particular policy area so do CPPRs. Whilst consumer protection contains many commonalties, there will be differences in its application and function across policy areas. As such it is necessary to break down consumer policy into to individual segments as in market reviews to fully understand the issues. However one of the CPPRs central aims is to ensure cross learning across the range of policy areas and to ensure consistency and better explain to stakeholders the criteria for implementing consumer protection polices. The CPPR process is therefore designed to review all areas of Oftel’s work in consumer protection to achieve these goals.

3.9 The comment was made that withdrawal of regulation would require a sufficient evidence base. This is implicit in the approach the guidelines take. Step six of the guidelines details a range of factors, economic, legal, consumer behaviour, etc, that would need to taken into account before deciding on a specific course of action. BT commented that SMP should not be the determining factor in imposing consumer protection policies on companies. The guidelines also cover actions required of all telecoms operators, not only those with market power.

3.10 That horizontal consumer protection legislation is to be used where possible and appropriate is recognised in the guidelines. If sector specific regulation were an outcome of a CPPR, this would need to be justified as part of the review process. It would be envisaged that generally this would only be recommenced where there has been market failure, or where competition policy or general consumer law has failed to provide adequate consumer protection. The requirement to assess why non-sector specific intervention cannot fulfil consumer interest criteria is recognised at step three. Similarly, ensuring that regulation is appropriate and defining aim of consumer protection policy is central to the CPPR. The consumer interest criteria detail not only policy justification, but also identify the aim ie providing ‘information’ to consumers. The use of self and co-regulatory mechanisms instead of formal regulation may also be an outcome of a CPPR if its is seen as an appropriate and effective way to protect consumers.

Do you consider the criteria to be assessed and information to be evaluated when reviewing consumer protection regulation set out in chapter two are sufficiently comprehensive and relevant? If not, what other factors should be considered?

3.11 NIACT felt that the criteria for assessing consumer protection regulation to be sensible. However they felt that consumers interests were unlikely to be uniform across all areas of the UK. As such account must be taken in each circumstance of the granularity of consumer interest to ensure that policy is appropriate. CCE, CfB and DIEL felt that the criteria did not recognise that different groups of consumers have differing interests and that policies may vary in their impact on these groups. As such CfB and CCE backed comments expressed by SACOT detailing that these consumer interests may need to be disaggregated.

3.12 Centrica whilst accepting the overall validity of the NCC criteria were concerned that the NCC criteria not be used to justify a higher standard of consumer protection than is generally considered adequate in other markets, Centrica stated that even in properly functioning and competitive markets customers may not always necessarily receive ‘value for money’ and comprehensive information on services and products may not be readily available.

3.13 C&W felt that the emphasis should be on reviewing the underlying cause or problem rather than policy, with a full Cost Benefit Analysis (CBA) before any regulatory action is contemplated. T-Mobile felt that the principal focus of the criteria should be on areas of consumer detriment. T-Mobile also felt that it was important that the assessment of the advantages and disadvantages of regulatory options should be subject to a CBA. Orange was supportive of the use of market research/information and other data sources in determining whether consumers are disadvantaged. However, Orange whilst generally supportive of the general criteria in the framework, did however feel that a number of areas raised did not fall within Oftel’s remit, particularly concerning the justification for regulatory intervention. These were: access and choice, safety, redress and, value for money.

3.14 DIEL is concerned that in conducting CPPRs Oftel does not have adequate information on the consumer groups DIEL represents ie consumers who are disabled or aged. In particular they are concerned about a lack of information held by CRS on these groups. DIEL would like to see a review of CRS scripts or dialogues for dealing with complaints with an organisation such as Ricability.

3.15 O₂ felt that the framework for review must ensure that regulatory intervention, through the imposition or amendment of general conditions, must conform to the test set out in the Authorisation Directive (that is, intervention must be objectively justified, proportionate, non-discriminatory and transparent). O₂ believe that it is not clear that the proposed framework for review would provide for this. It was also felt that some of the consumer interest criteria were too broad, whilst others were unnecessary. O₂ thought the criteria of 'redress', 'representation' and 'privacy' should be removed due to the existence of other consumer protection legislation.

Oftel comment

3.16 The ACTs commented on the need for the guidelines to take into account that different groups of consumers have different needs and interests and that impact of policies may impact differently on various groups of consumers. That different groups of consumers will often have different needs and issues is recognised by Oftel, this is generally implicit in Oftel’s work. The impact on different groups of consumers of a policy is part of the CPPR process and is stated in the guidelines and checklist. A number of stakeholders commented on the need consumer detriment to play a role in any policy analysis. This is recognised in step six of the checklist and is part of the policy evaluation process.

3.17 DIEL raised the concern that Oftel may not have adequate information on elderly and disabled consumers when it carries out its market research surveys, and that Oftel relies on omnibus surveys which are likely to ignore or under represent disabled or elderly consumers. All of Oftel’s quarterly market research resources are now bespoke surveys as is the majority of ad hoc research. Elderly and disabled customers are included in these surveys and as much information is gathered in these surveys about the elderly and disabled as is about other groups of consumers. As regards DIEL’s comment that there is a need for a review of CRS scripts and dialogues, CRS is currently in the process of introducing new procedures on how it records complaints that relate to elderly and disabled consumers.

3.18 C&W and T-Mobile felt that before any regulatory action was contemplated a full cost benefit analysis (CBA) should be carried out. Undertaking a CBA before introducing regulation could be part of the process of carrying out a CPPR if considered appropriate. Oftel's regulatory option appraisals (ROA) are part of the CPPR guidelines. ROAs are the mechanism by which PPMs can assess a range of different courses of action when determining policy. Where warranted and depending on the complexity of the issues, a formal quantified CBA may be felt to be an appropriate part of the review process.

3.19 Centrica had some concerns about 'value for money' as one of the consumer interest criteria. Orange and O₂ also felt that some of the consumer interest criteria were not appropriate whilst others required greater clarification. Oftel considers that the consumer interest criteria contained within the guidelines to be appropriate. The review guidelines are intentionally wide so as to cover the full range of consumer protection issues that Oftel is involved in. Oftel has projects/programmes across a range of many of the consumer interest criteria identified. The criteria are reflective of the range of reasons why consumer protection regulation is undertaken. The guidelines do however provide a test (step three) to determine the appropriateness of Oftel intervention ie whether horizontal consumer legislation or the actions of suppliers and operators etc, are able fulfil the consumer interest criteria.

3.20 The guidelines are primarily concerned with reviewing existing areas of Oftel’s work and ensuring that it remains appropriate for Oftel continue to act in these areas. Whilst the guidelines can be used to asses the appropriateness of proposed new policies, the primary focus is to review existing consumer protection policies across a wide range of consumer policy areas. The consumer interest criteria should not be seen as a vehicle for launching new initiatives/regulation, but a mechanism for reviewing the appropriateness of regulation. That any new regulatory action must conform to the test set out in the Authorisation Directive is stated in the guidelines. Ensuring that any new regulation must be justified, transparent, non-discriminatory and proportionate has always been implicit in Oftel’s work and is reflected within the CPPR process (step five, Oftel strategy principles).

Do you consider the process set out in chapter two (of the consultation document) is sufficiently transparent, open, easily understood and accessible to stakeholders? If not how would you suggest it could be improved?

3.21 NIACT felt that the process for analysis set out in the document had a very good level of transparency and openness. NIACT believe that consumers will find it user-friendly and easy to understand, but they would encourage Oftel to include a requirement to inform consumers of any new changes made. CCE and CfB wanted more clarity on how the respective resource costs available to industry and consumers will be taken into account when a self or co-regulatory policy is being contemplated. Orange felt that the CPPR process should prove sufficiently transparent, accessible and easy for stakeholders to understand, however the onus would be on Oftel to ensure that the CPPR process is followed on all occasions.

3.22 CCE felt it would be helpful to identify key stakeholders at the outset of any review process. BT felt that was a need for greater explanation of how reviews would be carried out ie what data gathering processes would be involved, etc. BT felt that it would be beneficial to have information on existing reviews in terms of what lessons had been learnt etc, to provide a basis for discussion.

3.23 BT felt that while a nine-month review timescale may be adequate for a long established policy, in other areas in a competitive market it is too long a period and BT feels there is a need to be able to do the reviews much more quickly. O₂ felt that the overall the process proposed was broadly right, that there were two major issues – that continual regulation should be avoided; and that existing regulation should be reviewed no less frequently than every two years.

Oftel comment

3.24 Consumer representatives raised the issue of consumer representation in any self/co-regulatory initiative that might be a possible outcome of a CPPR. Oftel is aware of the need for adequate resourcing for consumer representatives to be able to fully participate in co-regulatory schemes and has in the past sought to provide whatever assistance it can to consumer representatives.

3.25 Adequate consumer resourcing will be an issue that will need to be addressed by Ofcom and its future consumer panel. The identification of key stakeholders at the start of the review process is seen as an important step in the review process by Oftel and will be part of any initial review planning. BT commented that there is a need for information on existing current reviews so that 'lessons learnt' can provide a basis for discussion in terms of how reviews might be conducted. Oftel is in now in the process of undertaking the first CPPRs, its is Oftel’s intention to use the first reviews to develop ‘best practice’ methods and record and use any useful lessons that can be applied in further reviews. Where possible CPPR consultation documents will list what data/market research sources they intend to utilise during a review.

3.26 The nine month consultation period was mentioned in the context of the maximum period of time that any review should take. It is anticipated that many reviews would not take this long, depending on the complexity of the issue the whole period could be much shorter. For example, it may be possible to carry out informal consultations outside of the formal consultation period, there may already be much existing data or information, etc. The guidelines are designed to be flexible in this respect, it will be up to the Oftel PPMs conducting the review to set out and justify the review timetable.

3.27 O₂’s comment on the desirability of reviewing existing regulation every two years is recognised in the guidelines, ensuring that regulation remains appropriate and proportionate is a central aim of the guidelines. However this is a general time frame. It may be that two years will not necessarily be appropriate. The review period may vary depending on the rate of change in a particular policy area or if other new external factors are taken into consideration ie introduction of new consumer protection laws, this could influence the time period between reviews.

Annex A

Oftel strategy principles updated April 2002

A.1 Listed below are those strategy principles that relate to consumer protection.

Annex B

Consumer protection policy reviews – indicative forward timetable

B.1 The tables below indicate when existing consumer protection policy areas will be subject to review. Table 1 lists projects and programmes that Oftel intends to give priority to reviewing in 2003-04*.Table 2 lists projects/programmes with later review dates or where review timings are still to be determined. The timetable has been split this way so as to give stakeholders indication of Oftel’s priorities as regards consumer protection policy review. The timetable also includes pre- formal consultation review work ie Ombudsman service compliance check on ADR mechanisms. It should however be noted that this in an indicative timetable only and may be subject to revision.

Table 1– Indicative review timetable for Oftel projects/programmes, 2003-04

Table 2 – Indicative review timetable for other Oftel projects/programmes

* The first phase of a CPPR will include a feasibility study of the scope and complexity of a policy review area including pre-consultation review work, where appropriate this may lead to a change in the review timetable and extent of the review to be undertaken.

** Universal Service Obligations cover a range of issues, as such any reviews undertaken would cover specific and appropriate areas of policy within the context of fulfilling USO obligations

*** The Welsh Language Act and Northern Ireland Act require regular monitoring and review of both schemes which is detailed in the management plan. Whilst the existence of the scheme’s is not subject to review, their effectiveness will be subject to review.

Note to table

The above list is based on projects and programmes appearing in Oftel's 2003-04 management plan. It does not include areas of work, which are: primarily market review based; or relate to the overall framework of regulation; or, comprise a one-off action which is not suited to a cyclical review process.