Business failings cost consumers £6.6 bn

Wednesday, 16 April 2008 12:00

Consumer detriment costs UK citizens some £6.6 billion annually, a new report from the Office of Fair Trading (OFT) finds.

The report finds that for every 1000 consumers interviewed, 542 problems were identified, and across the whole of the UK population this equates to an estimated 26.5 million problems over the last year.

Some 10,000 consumers were questioned as part of the survey.

Detriment refers to any instance where a customer suffers as a result of their dealings with an organisation, partly or wholly as a result of the organisation accidentally or deliberately treating the customer unfairly.

Of those experiencing financial detriment fifty-five per cent resulted in a financial detriment below five pounds.

Only four per cent of problems led to detriment levels higher than £1,000 - with the highest costs recorded in the insurance industry.

However, the goods or services where most complaints were reported include the telecommunications, domestic fuel and personal banking sectors.

"Only five per cent of people in the UK report their complaint through channels such as Trading Standards and Consumer Direct," said John Fingleton, OFT Chief Executive.

"This research is crucial in improving our understanding of problems we do not always see or hear about. Consumer confidence in markets is important to making markets work well and maintaining a strong and growing economy.

"Understanding where consumers are experiencing the most problems and incurring the greatest losses will help us to set priorities efficiently and focus the work of the OFT on markets that are not working well."

Despite the widespread detriment incurred by consumers, only 64 per cent of respondents complained or took action to rectify their problem.

Complaint levels were highest for problems occurring in the insurance, personal banking, internet and domestic fuel sectors - but complaints were lower in the small domestic appliances, medical goods and services and postal services.

• Tags:
• household
,
• news
,
• spending habits