Consumers lose a tenth of income dealing with poor practices
Spring might be in the air, with Easter on the far horizon, but Citizen’s Advice aren’t feeling very cheerful, with the issue of a new report that estimates consumers are losing almost a tenth of their income through problems with faulty goods, bad business practice and poor service.
Each year, Citizens Advice deals with 1.4m problems related to consumer goods, services and credit receives 3,000 calls a day. The charity has now calculated that £1 in every £10.60 earned was being lost as a result of poor practice by businesses used by consumers.
In its new report, Consumer Challenges 2015, Citizens Advice said consumers lost an average of £250, which for the poorest fifth of households is the equivalent of 19% of monthly income.
Interestingly, credit card debt is no longer the biggest debt issue for consumers, with complaints around these debts set to drop by 12% to 155,700 over the year. The top concern for consumers is now council tax debt, with Citizen’s Advice expecting to deal with 191,400 council tax debt issues in 2014/15 – a 20% increase on the previous year. Rising renta are also high on the consumer agenda, it said, with the number of rental debts reported to the on track to reach 122,800 by the end of March.
However, debt in itself is no longer the biggest problem facing clients. In 2008, debt issues made up 32% of issues while benefits and tax credit issues accounted for 27% of problems; by the end of 2012 it said this had switched to 29% and 37% respectively, with the advent of Universal Credit likely to exacerbate the problem further.
The top five sources of consumer problems, apart from debt and benefits, were secondhand cars, home improvements, energy, telecoms and furniture. One in four people seeking help had lost £600 or more, while one client faced losing up to £33,000 due to problems with a motor home.
Gillian Guy, chief executive of Citizens Advice, said “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.”