The UK government launched its Smart Data Review on 28 September 2018 (Review). The Review will look at how technology, such as online comparison tools and open banking, can be used to make it easier for consumers to get good deals on essential services and put an end to consumers paying unjustifiable ‘loyalty penalties’ for staying with their service providers rather than switching.
Background to the Review
The government’s Modernising Consumer Markets green paper highlighted the challenges that consumers face in regulated markets, such as financial services, energy and telecoms. It recognised that consumers often struggle to stay on top of their contracts for essential services, find it difficult to identify the best deal and end up paying considerably more by not switching.
These challenges have been further highlighted by a ‘super-complaint’ submitted to the Competition and Markets Authority (CMA) by Citizens Advice, the UK consumer watchdog, on the same day that the Review was launched. This complaint estimates a cost of £4.1 billion per year to consumers who remain loyal to their service providers in these markets. This penalty is disproportionately paid by vulnerable, lower income and less educated consumers who do not realise they are being penalised for their loyalty and face obstacles when trying to shop around. The CMA will now investigate the complaint and engage with relevant regulators, such as the FCA and Ofcom, before publishing its response.
In relation to the Review, the government recognises that new technologies, such as automatic switching services and utility management services, have the potential to address many of the problems faced by consumers in regulated markets. However, these innovative intermediary services require access to customer data, which is often locked away in a way that works against consumers and innovators. For example, development of these services can be constrained by difficulties in accessing data on consumers’ current tariffs, their usage and the other available deals in standard formats.
Aim and scope of the Review
The Review aims to build on existing data initiatives, such as open banking, midata and the UK’s Data Protection Act 2018, which introduced the right to data portability that allows consumers to have their personal data given to them or a third party of their choice in a commonly used, machine-readable format.
The Review will focus on how data portability can be used to improve the consumer experience in regulated markets. Specifically, the Review will identify the steps that the government, regulators and others need to take to:
- Accelerate the development of innovative intermediary and other services.
- Ensure that a wide range of consumers can benefit from those services, not just the digitally savvy.
- Establish a regulatory and policy framework which builds consumer trust in data portability and innovative intermediaries.
The government plans to consult with stakeholders, including developers, intermediaries, regulated companies, consumer organisations and charities throughout the Review. All interested parties are invited to register their interest at firstname.lastname@example.org. The government is particularly interested to hear from providers of innovative data-driven consumer services or those who are considering developing such a service. Conclusions and next steps will be announced in the first half of 2019.