Regulation can't fix the energy industry

Let's stop pretending it can.

Last week's changes to the energy billing regulations, represent the biggest regulatory change experienced by the industry since privatisation. In fact, they are some of the biggest changes to any regulation, in any industry, and are all the more ground-breaking for directly affecting the way that energy companies sell their products to the consumer. At first glance , this was a simple case of victory for consumers over the corporate world, but the situation is more complex. After all, there's something inherently wrong with the idea of a predominantly consumer "victory" - the right balance of market forces and regulation ought to result in a capitalism that works equally in the interests of producer and consumer. If that is not the case, then it's a clear indicator that something has gone wrong, and that the balance needs to be restored.

These new regulations will go some way towards achieving  that, but they certainly shouldn't be seen as a happy outcome. The costs of any regulation are commonly passed to the consumer, and these changes will be no exception. No regulation is ever set in stone, however, and business leaders in the utilities industry should not give up trying to make theirs the sort of industry that requires less regulation, and not more. Leaders in other regulated industries should also take note. There will be much to learn from how the industry deal with its new regulatory environment, but there is also much to learn from the circumstances that led to such drastic action.

Therefore, it makes sense to examine why the regulator felt compelled to act in such drastic fashion. Regulation may seem to be the lesser of two evils, but the point is that the industry's relationship with its customers should never have deteriorated to the point where that was the case. For business leaders in the utilities industry, the lesser evil really ought to be an investment in building a productive relationship - fuelled by more in-depth insights - with their customers. Indeed, businesses in any regulated industry ought to take this attitude. A more proactive approach to soliciting customer opinion means that management are aware of the strength of customer demand say, for simpler pricing.  The investment required to do so, and the potential losses incurred, will almost always be offset in the long term; if industry practices can produce satisfied customers, then they will have a satisfied regulator as well.

At first glance, it may appear that energy companies have simply played by the letter of the law, but it's really more a case of them forgetting that their fight is with each other, and not with the regulator. There's a lack of competition,  but that's not to say that there are too few energy companies for market forces to be effective - the UK telecoms industry is one of the best in the world, and has fewer major players than the energy market. Rather, energy industry leaders have come to focus on the regulator, and not their competitors. Accordingly, regulators should see promoting competition as a priority, and a huge part of that comes from seeing the voice of the customer as a business resource, not just a matter for the customer complaints department. In a sector with an ethic of genuine competition,  those companies that do not heed the wishes of their customers do not last long. For example, the OFT rarely chastises retailers for unreasonable pricing - consumers do a very good job of that themselves.

I have written previously for this magazine of how we as a public have a vital part to play in building better businesses, and the energy industry is no exception. While it may form a relatively mundane part of our consumer experience, it is nonetheless a costly one, and we shouldn't allow ourselves to be distracted from making our voices heard. Energy companies for their part ought to make a  greater effort to listen, and to act upon what they hear; not only might they find advantages for their business, but the regulators would no longer have to interfere so strongly in the industry. It is right that  the state should step in when business practices within an industry leave consumers with few good options. However, it is the proper function of businesses to provide consumers with as many good options as possible, and that is the case in regulated industries as much as it is in those elsewhere in the economy. If customers are not forthcoming with their opinions then business leaders should do more to obtain their input - surely companies would rather meet the demands of their customers, rather than leaving it to the regulator to do so?

Photograph: Getty Images

Claire Richardson is VP at Verint

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The private renting sector enables racist landlords like Fergus Wilson

A Kent landlord tried to ban "coloured people" from his properties. 

Fergus Wilson, a landlord in Kent, has made headlines after The Sun published his email to a letting agent which included the line: "No coloured people because of the curry smell at the end of the tenancy."

When confronted, the 70-year-old property owner only responded with the claim "we're getting overloaded with coloured people". The letting agents said they would not carry out his orders, which were illegal. 

The combination of blatant racism, a tired stereotype and the outdated language may make Wilson seem suspiciously like a Time Landlord who has somehow slipped in from 1974. But unfortunately he is more modern than he seems.

Back in 2013, a BBC undercover investigation found 10 letting agent firms willing to discriminate against black tenants at the landlord's request. One manager was filmed saying: "99% of my landlords don't want Afro-Caribbeans."

Under the Equality Act 2010, this is illegal. But the conditions of the private renting sector allow discrimination to flourish like mould on a damp wall. 

First, discrimination is common in flat shares. While housemates or live-in landlords cannot turn away a prospective tenant because of their race, they can express preferences of gender and ethnicity. There can be logical reasons for this - but it also provides useful cover for bigots. When one flat hunter in London protested about being asked "where do your parents come from?", the landlord claimed he just wanted to know whether she was Christian.

Second, the private rental sector is about as transparent as a landlord's tax arrangements. A friend of mine, a young professional Indian immigrant, enthusiastically replied to house share ads in the hope of meeting people from other cultures. After a month of responding to three or four room ads a day, he'd had just six responses. He ended up sharing with other Indian immigrants.

My friend suspected he'd been discriminated against, but he had no way of proving it. There is no centrally held data on who flatshares with who (the closest proxy is SpareRoom, but its data is limited to room ads). 

Third, the current private renting trends suggest discrimination will increase, rather than decrease. Landlords hiked rents by 2.1 per cent in the 12 months to February 2017, according to the Office for National Statistics, an indication of high demand. SpareRoom has recorded as many as 22 flat hunters chasing a single room. In this frenzy, it only becomes harder for prospective tenants to question the assertion "it's already taken". 

Alongside this demand, the government has introduced legislation which requires landlords to check that tenants can legitimately stay in the UK. A report this year by the Joint Council for the Welfare of Immigrants found that half of landlords were less likely to rent to foreign nationals as a result of the scheme. This also provides handy cover for the BTL bigot - when a black British tenant without a passport asked about a room, 58 per cent of landlords ignored the request or turned it down

Of course, plenty of landlords are open-minded, unbiased and unlikely to make a tabloid headline anytime soon. They most likely outnumber the Fergus Wilsons of this world. But without any way of monitoring discrimination in the private rental sector, it's impossible to know for sure. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.