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UK consumers losing hundreds monthly

Kit Klarenberg
Written By:
Kit Klarenberg

Consumers lose £1 from every £10.60 of their monthly income due to faulty goods, bad business practice and poor service, according to the Citizens Advice Bureau’s Consumer Challenges report.

Consumer Challenges is an annual release that examines consumers’ experience of markets.

The new study notes that while inflation may be down, some industries are causing financial harm in other ways.

Analysis of people who got help from the charity and went on to solve their problem reveals:

  • The average monthly financial loss faced is £250 – equivalent to 9 per cent of the average monthly income
  • For the poorest fifth of the population, average loss is equivalent to 19 per cent of their monthly income
  • 1 in 4 people face losses of £600 or more every month

It’s not just money that’s lost due to poor service; consumers spent 184,000 hours – the equivalent of 21 years – on the phone soliciting advice on their problems.

Data from CAB reveals:

  • CAB deals with 1.4 million consumer problems annually
  • 3,000 calls a day are made to the CAB consumer service
  • Top 5 consumer problem areas 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, a growing proportion of people have been coming to Citizens Advice seeking help with rent, council tax, water and fuel debts.

During the same period, the proportion of debt issues around credit cards, mortgages and unsecured personal loans declined.

Debt problems with credit cards are expected to fall by 12 per cent to 155,700 in 2014/15.

“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,” said Gillian Guy, chief executive of the Citizens Advice Bureau.

“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. Industry, government and regulators need to help households by fixing failures in consumer markets.”