Ofcom under fire for phone-in quiz scandal…

Ofcom are under fire by politicians and the public for failing to stop the recent phone-in quiz scandals. The scandal took a turn for the worse this week when it was revealed on a BBC Panorama programme that GMTV viewers had been conned out of about 40 million GBP over a four-year time period.

The press came out swinging. One particularly aggressive piece can be found in today’s Daily Express, where Padraic Flanagan writes in part:

‘Politicians are angry at the lack of urgency shown by Ofcom, which has an annual budget of £160 million and employs 1,000 people from its lavish offices by London’s Southwark Bridge. Ofcom was recently criticised by taxpayer groups after it emerged that 13 of its executives, including chief executive Ed Richards, a former senior adviser to Tony Blair, is earning more than £175,000 a year.’

And continues:

Hugo Swire, Shadow Secretary of State for Culture, Media and Sport said: “There clearly needs to be a proper examination over when these dubious practices began, and just when Ofcom and others were aware of the problem.

“Given the almost weekly revelations of misleading actions of phone-in TV programmes, it is clear that the system just isn’t working.” Members of the House of Commons Culture, Media and Sport select committee responded with similar anger.

Labour MP Rosemary McKenna said: “How many more scandals are going to surface before real action is taken?”

Lib Dem MP Adrian Sanders said: “I just wonder whether Ofcom have got the teeth to do something about this. The problem is that someone has to take responsibility here and act as a regulator, acting for the consumer.”

My take: Ofcom were caught on the back foot here, I think somewhat complacent over the co-regulatory scheme (ICSTIS) it had in place. As we have written before, Ofcom initially fashioned itself as a behind-the-scenes framework-style regulator. Its mission was to create or foster the conditions for competition in a forward-looking manner and then withdraw as appropriate. But that hasn’t worked to satisfy many consumers on a wide range of fronts, particularly in the telecoms sphere. From my perspective — as a procedure hound — that approach failed on day one in certain respects as consumers would turn to Ofcom’s then-unusable website and just become more confused.

Ofcom structured itself in the manner of a consultancy firm, adopting a corporate image and employing high-calibre professional staff instead of bureaucrats. The result of this was the great riverside offices and high salaries and the resulting perception — whether real or not — that the regulator was aloof, preferring to mingle with the industry and ponder about the future rather than champion the consumer on day-to-day problems. Now I can attest that this is not the case. I’ve met with numerous Ofcom staff and found a great willingness to take on tough issues, find out what the public want, and intervene where necessary. But this populist-style approach to regulation is generally not fashionable in the world of economic regulators, most of whom are fairly indoctrinated in the OECD / ‘better regulation’ school of sober analysis, light-touch and preference for regulatory withdrawal.

So Ofcom face a challenge that has surfaced here and will continue to surface: How to find the right balance between the politics of regulation and the science of regulation. It’s certainly not easy. But I have one suggestion. At the very least, Ofcom’s CEO Ed Richards should avail himself of the opportunity to speak out in a forceful manner on these types of issues, using his ‘bully pulpit’ to show he is on the side of consumers. It can be done in a manner that does not prejudice future regulatory deliberation and action. That would go a long way to satisfying Ofcom’s critics in Parliament.