Poor customer service is depleting household income

28th Sep 2016

Customers are losing more than £10bn a year due to substandard service, a new report from Citizens Advice has found. 

The survey, based on interviews with more than 1,600 people, reveals that poor quality service accounts for approximately 45% of the annual cost to consumers caused by the problems they experience with businesses.  

In total, this cost amounts to £23bn, with faulty products and delayed deliveries also to blame. The figure stems from a combination of money spent trying to fix or replace poor quality goods, and lost earnings due to time spent trying to resolve a problem. Sub-standard service provision is the most time-consuming problem type, accounting for almost a third of all hours lost.

Across all sectors, the report shows that 35% of consumers experienced at least one problem in 2015, with more than 123 million problems reported in total. Poor quality service accounts for almost one third of all customer issues.

Problems with TV, phone and internet services – such as poor reception, higher than expected bills or difficulties ending a contract – are the main sector-specific culprits, costing customers £4.2bn per year. Issues with professional services cost consumers £4.1bn, while £3.5bn is wasted on construction, £2.6bn on home maintenance services, £2.6bn on property services and £1.2bn on pension and investment services.

The results also show that 55% of consumers do not push for compensation, often because they find the process too complicated or do not think they will be compensated. This supports the findings of the recent UK Customer Satisfaction Index produced by the Institute of Customer Service, which found that, in many sectors, customers feel they need to expend more effort than they did this time last year to reach the outcome they want.

Citizens Advice believes these problems are undermining government attempts to improve household income through increasing the income tax threshold and raising wages. 

“Consumer markets are a vital pillar of the UK economy – but at the moment there are some companies who are ripping off consumers and undercutting businesses that do the right thing,” says Gillian Guy, chief executive of Citizens Advice. “As well as hammering household finances, failing consumer markets hit essential parts of people’s lives that they rely on – like energy supply, transport, banking and insurance.” 

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