Consumer investigation finds billions of pounds lost through consumer cons
The report of Ed Mayo's consumer investigation for Labour's Policy Review, published today, finds that consumers are losing billions of pounds every year from ‘rip-offs’ and hidden charges and are facing difficulty in seeking redress.
The investigation, led by Ed Mayo, Secretary General of Co-operatives UK and former Chief Executive of the National Consumer Council, argues that consumers can be empowered against rip-offs and sharp practice which hit consumers’ pockets, undermine confidence in markets, and damage the many businesses that are doing right by their customers.
Through evidence hearings and submissions, the investigation brings together evidence to build up a picture of the scale of consumer loss. Those on lower-incomes pay on average £1,289 per year more for goods and services than those on average incomes, while a small number of consumer problems account for more than three quarters of all financial loss - tackling these would significantly reduce overall loss to consumers.<div>
Some markets and services fare better than others, with vehicle repairs, banking and utilities scoring most poorly on consumer experience, while the most common complaints relate to poor service quality (20 per cent of complaints) and defective goods (17 per cent). An analysis of post codes and complaints revealed consumer ‘black spots’, with complaints far higher than the national average including in Bradford, Manchester and Cowbridge, South Wales.
To deal with Britain's consumer cons, the investigation calls for an overhaul of consumer protection, putting consumer confidence at the heart of economic policy. ‘Trust in consumer protection rules’ was identified by consumers themselves as the most significant root cause of success in individual markets.
Ed Mayo's report recommends:
“In light of successive scandals which have eroded the confidence of consumers - both individuals and businesses - we need to change the rules of the game to stop people getting a raw deal, restore trust and back responsible businesses. That is why consumer champion Ed Mayo was commissioned to lead this consumer investigation for Labour's Policy Review.
“I welcome Ed Mayo’s report today and his ideas on how we can better empower consumers, underpin fair markets and end rip offs. While these issues are particularly in focus because of the recession made in Downing Street and the squeeze on family budgets, today’s report is about getting things right for the long term too.
“We will look very closely at the recommendations which Ed Mayo has made, as well as the valuable insights which he offers in his report, over the coming months.”
Report author, consumer champion Ed Mayo, said:
“The experience of consumers is a litmus test for future economic success. Where consumers are confident, they can reward good business practice and be responsive to innovation. Where their treatment is shoddy, in cases such as unsafe PIP breast implants and the saga of Payment Protection Insurance, goods and services can become stuck in a cycle of weak demand and low trust.
“That’s why an essential element of a successful economy is to ensure consumers have that confidence and are supported as a primary driver in making markets work effectively for both all. This in turn helps provide the foundations for UK businesses to succeed.”