Regulators, including the Financial Conduct Authority, must cooperate better to ensure competition results in better choice, service and protection for consumers, they have been told.
The Public Accounts Committee today (July 12) published a report on consumer protection, investigating the problems consumers face in accessing financial services and other areas such as water, energy, and communications.
The report highlighted that, in spite of common issues, individual regulators took different and often inconsistent approaches in protecting consumers, specifically those that are more vulnerable.
It stated: "Vulnerable consumers, in particular, face a number of common challenges. Many struggle to afford all of their essential services, and often owe debts to more than one service provider at a time."
According to the report, the expansion of digital platforms, while increasing accessibility in many respects, has also restricted it.
It described digital exclusion as a "cross sector problem", citing online banking and the ability to choose the best deal as issues facing the financial services sector.
Chair of the Public Accounts Committee, Meg Hillier MP, said: "Issues including debt problems, struggling to access the best deals, and seemingly impenetrable bills can significantly impact people’s daily lives.
"The primary role of regulators is to protect consumers from such issues. The main regulators of these sectors, however, too often take inconsistent approaches. They need to be clearer about what they are trying to achieve for consumers and the common solutions they can bring.
"Regulators must work closer together with the best interest of consumers at their heart. They must ensure that competition leads to more choice, better services and prevent consumers from being exploited by suppliers."
Among the recommendations was for the four regulators - Ofwat, Ofgem, Ofcom and the FCA – to work together to develop consistent approaches for common problems.
The report also suggested that common principles should be developed by each regulator in order to measure their effectiveness and impact on consumers.
The committee did however applaud the progress made by the FCA in this area with its structured programme of evaluations, which other regulators are now using as an example of good practice.
Each of the regulators must explain in writing the specific joint projects they expect to complete and what metrics they are using to measure the impact on consumers’ lives by the end of the year.
An FCA spokesperson said: "We welcome the Public Accounts Committee report on consumer protection. Securing an appropriate degree of protection for consumers is one of our key priorities. We will work with our fellow regulators and provide feedback."
Ofwat and Ofcom also welcomed the report.
Patrick Connolly, chartered financial planner at Chase de Vere, agreed regulators should find a way to cooperate better.
He said: "In theory, businesses should always be putting their customers at the forefront of everything they do. Unfortunately this is not always the case.
"Across all industries there are examples of consumers who lose out because they aren’t aware of the choices available to them or are prevented from accessing the best deals