Impact of Consumer Rights bill on Customer Experience

By Meriel Lenfestey

The Companies Act 2006 requires company boards to act in the interest of all members of the company. ‘Members’ include shareholders, employees, suppliers, customers the community and the environment.

The short-term pressure imposed through shareholder expectations, their tendency to switch loyalties quickly, and their increasing power demonstrated by the shareholder spring makes it difficult for a publicly-owned company to genuinely act in the interests of any of the other members if there could be any negative short-term impact on the shareholders.

One solution is legislation, or principles, to force directors and shareholders to change their attitudes. A recent area where this is demonstrated is in social and environmental responsibility. The most recent version of the Global Reporting Initiative’s Sustainability Reporting Guidelines, contains updated principles which now require boards to consider the impact they have on the community, their employees and the environment in a thorough way, and to act to address any weaknesses both in their own organisation and in their supply chain. It’s too early to know whether this is simply extra administration, or whether it becomes effective in improving corporate responsibility from the heart of the organisation.

As a customer champion, I was excited to hear the UK Consumer Minister, Jo Swinson, announcing that there will be a new Consumer Rights Bill early in 2014. It was described as “the most radical overhaul of consumer law for more than three decades”. I wondered whether customer experience was about to come of age? Whether the Bill would enable companies to take a longer term view and invest in customer experience.

It’s early days, but my initial reaction is disappointment. The act appears to be focussed on how companies behave when problems arise, rather than on creating services and products which please and serve customers in the first place. It includes consumer rights around contracts, returns, quality, effective descriptions, rights, availability, compensation and liability. Unlike previous consumer protection law, it has clauses devoted specifically to digital content. This is all important, particularly in the age of social media, where a company’s reputation is in the hands of customers. The danger is that it creates an even more risk-averse attitude to innovation, with companies resisting change in favour of constant ‘improvement’ of the tried and tested. 

In a similar way to the introduction of the EU privacy directive in 2011, I will expect to see our clients seeking our advice on ways to ensure compliance is achieved. This will likely impact effective communication of previously legal jargon such as Ts and Cs, increased attention on the customers’ context of use such as helping them ensure their broadband speed is adequate for downloads, and processes and services related to reporting and sorting out problems. This translates to managing customers’ expectations, avoiding problems, and dealing with problems.

Wouldn’t it be great if the bill also required companies to consider, monitor and report on the impact on their customers? This would empower the customer in the boardroom and give them some chance to be considered in the formation of strategy. Perhaps it’s not too late to consider this dimension in the new bill.

What do you think?