1 in 4 people with consumer problems face losses of £600 or more
Consumers lose £1 from every £10.60 of their monthly income due to faulty goods, bad business practice and poor service, finds Citizens Advice.
The analysis is reported in Citizens Advice’s major new report Consumer challenges 2015, released today, which examines consumers’ experience of markets now that the country is out of recession.
The latest inflation figures are expected to reveal that prices are rising at their slowest pace for some time and, in some cases, are falling. The new study highlights that while inflation may be down; some industries are causing financial harm in other ways.
People who sought help from the national consumer line, run by Citizens Advice and Citizens Advice Scotland, face being out of pocket by hundreds of pounds when firms don’t uphold their agreements or provide faulty products
Analysis of people who got help from the charity and went onto solve their problem reveals:
- The average financial loss faced is £250 - equivalent to 9% of the average monthly income.
- For the poorest fifth of the population the average consumer loss is equivalent to 19% of their monthly income.
- 1 in 4 people face losses of £600 or more.
- One person who got help from the Citizens Advice consumer service faced costs of up to £33,000 due to problems with a motor home.
During the down-turn costs for telecoms have remained stable suggesting the market is working well for consumers, but costs are often incurred if people try to cancel agreements due to bad service.
One person sought help from Citizens Advice after they waited two months for a new broadband service to be installed. After a number of cancelled installations by the company the customer decided to cancel the contract but was told he’d have to pay a £120 exit fee.
The study points out that it is not just money that is wasted when things go wrong. Consumers spent 184,000 hours - equivalent of 21 years - on the phone receiving advice on their consumer problems.
Gillian Guy, Chief Executive of Citizens Advice, said:
“Bad business practices cost people time and money. Lower prices will help ease some of the pressure on people’s finances but it does not mean that consumers are getting good service or aren’t losing money in other ways.
“Some firms are using hidden terms and unfair cancellation processes to extort money from their customers. Tough times can be a fertile breeding ground for these kinds of bad practices. As a recovery takes hold, particularly with public spending so tight, industry, government and regulators need to help households by fixing failures in consumer markets.”
Data from Citizens Advice and Citizens Advice Scotland reveals:
- Citizens Advice helps with 1.4 million problems related to consumer goods, services and credit each year.
- 3,000 calls a day are made to the Citizens Advice consumer service.
- Despite telecoms prices going down, it is now the fourth biggest issue we help with – overtaking furniture.
- Top five consumer problems (not including credit) reported to Citizens Advice are second hand cars, home improvements, energy, telecoms and furniture.
The report also reveals shifts in the nature of problems related to consumer debt. Since 2012/13 a growing proportion of people have been coming to Citizens Advice seeking help with rent, council tax, water and fuel debts. Yet during the same period the proportion of debt issues around credit cards, mortgages and unsecured personal loans has declined.
Council tax debt is now the most common debt problem reported to Citizens Advice overtaking credit cards:
- The charity expects to help with 191,400 of council tax debt issues in 2014/15 - a 20 per cent increase on 2013/14.
- The increasing demand on housing and rise in rents means help with rental debts could reach 122,800 by the end of March 2015, 5% up on the previous financial year.
- Debt problems with credit cards are expected to fall by 12 per cent to 155,700 in 2014/15.
Notes to editors:
- The average monthly income after all tax and benefits is £2,653 per month. The average financial loss from a consumer problem is £250, 9% of the average monthly income.
- The average monthly income after tax and benefits for those in the lowest 20% of incomes is £15,592.
- In 2014 Citizens Advice carried out interviews with people who had received advice from the Citizens Advice consumer service. Of the 898 who said things had got better, 563 could put a monetary value on what they would have lost if they hadn’t resolved the problem.
- The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
- The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
- To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
- You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
- Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014 service statistics see our quarterly publication Advice trends
- Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.