This website will no longer be updated. Please see www.consumerfutures.org.uk for more information.

Consumer Focus is changing. We published our 2013/14 Work Plan at the end of March. Although some things are changing, others are not. We still retain our statutory duty to protect consumers in vulnerable situations (sections 6, 12, 13).  Reflecting this we published an action plan for empowerment in conjunction with the Citizens Advice service  last year and looking forward one of our three strategic priorities is, Consumer vulnerability and inclusive services (See page 7 of our Work Plan).

Not having a bank account can add significantly to the disadvantage faced by people in the most vulnerable positions in society. A bank account enables people to get better deals, for example Direct Debit for energy bills, access and manage money safely and conveniently, make payments and receive their salaries, pensions and any other social security benefits.

Last November we published a report “The best of British banking”. This bucked the trend for bashing bankers. Instead it actually praised banks for their success in halving the number of ‘unbanked’ citizens by introducing basic bank accounts. These accounts are simple accounts to keep money and make payments from, e.g. Direct Debits, they do not have overdraft facilities.

For one in five of our fellow citizens such an account is their only or main bank account. However, we noted that some banks were reducing the functionality of these accounts and restricting the groups to which they were available. For example Lloyds Banking Group and RBS stopped allowing basic bank account customers access to the full Link network of ATMs/cash machines.

Of course these accounts are not very profitable for banks and we feared commercial pressure would lead to a ‘race to the bottom’ as banks withdrew from the market leaving people in vulnerable situations even more exposed in hard times.

We encouraged the banks to consider setting a basic bank account standard to which they would all abide, thereby reducing the pressure to water down the offer. We held a series of round tables with the major banks, the Treasury, the Department for Work and Pension, the Financial Conduct Authority and other consumer groups.

It was good to hear that all the banks agree in principle that the basic bank account is an essential product in the marketplace for any citizen over 18 (except those with a history of fraud or with violent or abusive behaviour). They have largely agreed to make their basic bank accounts available to undischarged bankrupts, once the new insolvency regime passes into law, and to make information available about basic bank accounts as an integral part of the current account suite. In addition, the banks have agreed to do further work on identity and address verification requirements with a view to simplification.

So far so good, but it has not yet proved possible to get the banks to agree on the following:

• –Access to the full LINK network of ATMs/cash machines for all basic bank account customers;
• An automatic ‘default’ offer of a basic bank account when a consumer applies for a bank account but where their credit score does not fulfil the bank’s requirements for a fully functional bank account;
• Active availability and promotion of basic banks accounts to consumers in branch.

In addition, not all the main banks agree on the publication of comparable market data on basic bank accounts. We can see no good reason why such data should not be in the public domain, especially as all banks have apparently now agreed to provide the data on a confidential basis to the Treasury. Publishing such data would provide transparency on how the basic bank account market varies across the banks, i.e. who is providing this vital service and who is not, and help inform public debate about the role of banks in serving all citizens who need bank accounts.

It is disappointing that the banking sector as a whole has not risen to the challenge – and opportunity – of demonstrating its commitment to responsible banking and service to all sections of the public.

There is however some good news. Lloyds Banking Group, Barclays and The Co-operative Bank have agreed to work together on a progressive package of minimum standards for basic bank accounts and have also agreed to publish their market share data. We welcome the positive stance taken by these banks and are pleased to see them stepping up in the absence of agreement with other market participants. We believe however that the other banks need to be strongly encouraged, or ultimately required, to also play fair and meet a set of minimum standards in order to have a level playing field – and consistency across the country – on access to basic bank accounts that give consumers the basic functionality they need. To make sure all providers are pulling their weight we also want market share data published to allow proper scrutiny of provider’s performance.

So, three cheers for some banks and let’s hope more follow, or our regulators and legislators act to ensure that this vital financial product does not wither and die. Banks are, or should be, profitable ventures providing the financial plumbing system for markets but given the nature of our economy they have also have social responsibilities which we have a right to demand they should fulfil.

For more information see our work planning page

Cymraeg

Cynllun Gwaith yr Uned Diwydiannau a Reoleiddir ar gyfer 2013/14 (PDF 330KB)

‘This is not a case of one bad apple or one rogue sales team. The problems at SSE affected the whole direct selling operation and represent a fundamental failure at one of our biggest energy companies. Other companies have also broken direct selling.  This has been a stain on the energy market since the introduction of competition. While the situation has got better and many companies have decided to end doorstep sales, the recent history casts a long shadow and Ofgem are right to take this scale of action. Consumer Focus fully supports Ofgem’s case for greater powers to benefit consumers  rather than the exchequer.’

See the Ofgem site for more information.

This joint report was born out of a common desire to increase the benefits that can be achieved from smart prepayment for customers, and to seek to understand and address the challenges to their delivery. This is particularly important given that more than 13 per cent of consumers use this this payment method and this number is expected to rise. Furthermore a disproportionate number of prepayment meter (PPM) users are on low incomes.

‘All serious projections show that our energy bills are likely to keep rising. Consumers have had to weather any number of energy price storms over recent years, and although the ‘cushion’ effect set out by DECC is welcome, consumers need something more substantial to soften the impact of continually rising energy prices.

Government policies will provide consumers with a level of protection compared with a ‘do-nothing approach’, however consumers are looking for a ‘do more strategy’.

It is almost universally acknowledged that the best strategy to reduce energy costs is to create more energy efficient homes.  Consumer Focus has argued that Government should use the billions they will raise in carbon taxes to deliver a more ambitious programme to insulate our homes to higher standards, saving the poorest in society money on their bills, cutting carbon emissions and creating economic growth quickly and across the country. Reducing demand is quicker, cheaper, more sustainable and solves the problem at source.

• Also, while we have to bring on new and cleaner generation plant which loosens our dependence on fossil imports, we have to focus on how we pay for the new investment. The trend is for bill payers, rather than tax payers or shareholders, to take the burden and risk. We must question whether that is right, and government should commit to the least regressive way to fund energy investment.

Notes to Editors

The report – ‘Jobs, growth and warmer homes’ issued in November 2012 by Consumer Focus shows that investing money raised through carbon taxes in a major energy efficiency programme is one of the best ways to create jobs and boost the economy, while also tackling fuel poverty.

The research shows that significant Government energy efficiency infrastructure investment could:

• Generate up to 71,000 jobs and boost GDP by 0.2 per cent by 2015 and create up to 130,000 jobs by 2027
• Lift up to nine out of ten households out of fuel poverty, reducing energy bills in all treated homes by at least £200 per year
• Cut household energy consumption by 5.4 per cent by 2027 and quadruple the impact of the government’s energy savings schemes – Green Deal and Energy Company Obligation
• Cut overall carbon emissions by 1.1 per cent, including household emissions reduced by around 5.6 per cent by 2027

‘This report on Simple Financial Products could mark a watershed moment in the evolution of retail financial services markets.

‘Simple products are long overdue. They would, at long last, provide consumers with the option of no frills, no catches products that people can understand and buy with confidence.

‘Because they would have some standard features designed to meet consumers’ needs, it would be possible for consumers to shop around and compare similar products, thus aiding effective competition.

‘Consumer Focus hopes and expects the financial services industry, encouraged by the Regulator, to get these products up and running. There is a large potential market for them.’

ENDS

We have devised a short questionnaire (10 questions) and would be grateful if you could share your opinions. The survey will take no more than a couple of minutes.

As well as our main account (@consumerfocus) there are also accounts for:

• Our energy team (@cfenergy)
• Consumer Focus Wales (@cfwales)
• Consumer Focus Scotland (@cfscotland1)

Also don’t forget you can sign up to our monthly enewsletter by emailing enews@consumerfocus.org.uk

‘Posting letters and parcels is an essential service and consumers are looking much harder at value for money and quality of service, even on the price of a stamp.

‘This year’s freeze on stamp prices for letters, following the big rise last year, is welcome news. The simplification of the pricing structure for parcels also makes sense, although consumers will need to be aware that the new medium parcel price may be more expensive than the current price.

‘Hopefully the changes to the parcels services will make choices simpler for consumers. However we all know that any change can be confusing, and so we would hope to see very clear information about the new services parcels displayed in every post office and for counter staff to provide consumers with the correct advice, so they choose the product and price that is right for them.

‘Also it would make good sense to identify every parcel posted over the counter with a simple mark to show that the consumer had made every effort to get it priced correctly.’

ENDS

Notes to editors:

In April 2012, the price of a 1st class stamp rose from 46p to 60p and 2^nd class from 36p to 50p.

• Comparing the comparison sites
• Investment in essential services
• The value of personal data
• Green doctor in the house
• More to see

February has been a busy month as we develop our new work programme and continue to prepare for transition to a regulated industries unit (RIU) that will launch in April. We held a number of stakeholder events in Cardiff, Glasgow and London to ensure we take onboard different perspectives on what we should be looking to achieve.

We have been very encouraged by what we have heard at these meetings. We have seen a restatement of support for the RIU and there has also been strong  support for the priorities we set out in our draft work plan. Stakeholders, governments, regulators, companies and other consumer bodies welcome what the RIU can do and want to work with us.

There’s still just time to respond to our consultation if you haven’t already done so. It closes on Monday 5 March.

This month we also ran a competition to name the new unit and Jo Swinson MP, Minister for Consumer Affairs, is considering the responses. We hope to be able to announce the new name shortly.

Comparing the comparison sites

Although price comparison websites have the   potential to empower consumers, there is an overwhelming choice of sites available.

That is why issues of impartiality, reliability and accuracy of information all play such an important role and are increasingly the subject of close  scrutiny by consumer bodies.

We commissioned mystery shopping research to examine price comparison websites’ information in terms of:

• accuracy of prices
• comprehensiveness
• whether independence was misrepresented
• whether there was evidence of fictitious recommendations
• openness about suppliers paying for prominence

We were also interested to find out if sites with accreditation schemes were more reliable than non-accredited ones. The research indicates that not all comparison websites have the same standards when it comes to the reliability, transparency of information and ease of use. The outcomes of our research were published in Comparing comparison sites.

Investment in essential services

A lot of money is needed for infrastructure investment, but whose pocket is it going to come from? What would happen if   we removed the social costs and green taxes from household bills? Is there a case to be made for shifting the burden to taxation on the grounds that it is more progressive? These are just some of the questions raised by our Chief Executive, Mike O’Connor in his blog post How do we meet the need for investment in essential   services?

The value of personal data

In the digital economy personal data is a growth business. The volume of personal data gathered by smart devices, searches, site visits, purchases, recommendations, likes, tweets and status updates is on the rise. Also growing is the value of this data to companies who capture, store, analyse and sell it on. However, consumers aren’t engaging with this process and are at risk of being exploited.

The challenge for those working in the consumer interest is to find a way to   transform the current scenario into a mutually beneficial one. These issues are examined by Liz Coll, Senior Policy Advocate at Consumer Focus in a pair of blog posts: Personal data – the new oil and Going beyond data protection.

Green doctor in the house

The Government has launched a number of initiatives to help consumers make their homes more energy efficient.

By installing things like an energy efficient boiler, draught proofing, loft   and cavity wall insulation consumers’ homes becomes warmer, cosier and easier to heat.

Consumers could be eligible to have one or more of these measures fitted to their home, with a range of great financing offers and assistance available.

To find out more about initiatives in your local area and to discover the options, visit groundwork/greendeal.

More to see:

Consumer vox pops on smart meter in-home displays

Growing up cold: the impacts of cold homes on children

‘Perhaps we should not be surprised to see higher profits after a cold winter and with the prospect of significant investment in our energy infrastructure.  But this announcement comes after more price rises last year, record numbers in fuel poverty and not long after the energy regulator warned of higher still energy prices for the foreseeable future.

‘We should not be surprised if consumers regard these results, and the warning of price rises to come, with a mix of resentment and dread.

‘From the outside, our big energy companies seem nigh-on recession proof. They are able to pass on the risks that come with volatile commodity costs in ways that other, more competitive, markets just could not.

‘The truth is that we do need profitable energy companies who are able to invest in our ageing energy infrastructure. We do need to ensure that the lights stay on and that we plan our way out of dependence on imported fossil fuels.

‘But consumers are anxious about the future. They need greater transparency about the relationship between the size of increased prices, increased profits and increased investment. They need to be confident that energy policy was as much about keeping energy affordable as about security of supply or reducing carbon emissions.

‘Neither would mean consumers’ welcome higher energy prices. But they are necessary to understand whether the interests of consumers drive this market or whether they are just there to pick up the tab, whatever it may be.’

ENDS

‘These reforms are welcome and over due.  We have allowed what should be a fair market for an essentially simple service to become a byword for complexity and confusion.

‘Energy suppliers know that consumers do not have confidence in the market.  Mere compliance with the reforms is not a sufficient goal.  If these reforms are going to earn consumer trust we will need to see a real transformation in the behaviour of energy companies and in the culture of the market.  That is the test that consumers will apply.  They will want to see it happen quickly and to feel the difference.  If not consumers will remain disengaged and mistrustful at a time when dire warnings of an energy crisis are ringing in their ears.

‘We need to confront the challenges of building a more sustainable energy future.  This will require major investment, for most of which consumers will ultimately pay, and it will require changes in the way people think about and consume energy.  Consumer trust in the energy market will be key. The implementation of these reforms is vitally important in building that trust.’

ENDS

‘Keeping the lights on is a real challenge which the nation has to meet.  We need to invest but we also need to think about how we protect the most vulnerable consumers who can least afford higher prices.  In the long term the best hope is more energy efficient homes.  We need to do more to ensure our homes do not leak energy and we are calling on Government to use the funds they raise in carbon taxes to insulate our houses to modern standards, saving the poorest in society money on their bills, as well cutting carbon emissions and creating jobs. 

‘With 6 million households in fuel poverty, rising to over 9 million by 2016,  and an increasing proportion of our incomes being spent on essential items like energy, this latest news, while not surprising, is chilling. 

‘Three things are vital:

1. We must focus not just on bringing new plant to market but on how we pay for the new investment. The trend is for bill payers, rather than tax payers or shareholders, to take the burden and risk. We must question whether that is right, and urge that the government to commit to the least regressive way to fund energy investment.
     
2. Policy makers must put energy efficiency at the top of the list. Reducing demand by making homes and businesses more energy efficient is such an obvious first step that the lack of a really ambitious programme is bewildering. Reducing demand is quicker, cheaper, more sustainable and solves the problem at source. A major energy efficiency programme should be financed by the billions we will pay on our bills in carbon taxation and would drive economic growth.
     
3. As always, those who can least afford to pay will suffer the most. Millions of homes face their own security of supply crisis every day and many have to respond by staying cold. Facing the security of supply crisis means tackling fuel poverty as well.’ 

ENDS 

Notes to Editors 

See also blog post by Chief Executive Mike O’Connor on how we pay for essential infrastructure.

In my last blog post I talked about the big contrast between the importance that external agencies attach to consumer data, and the significance consumers themselves assign. Now I turn to look at if the digital economy runs on personal data, and consumers are the primary source of this new commodity, will consumers seek to exploit its potential, or continue to be exploited for it?

The challenge

The challenge for those working in the consumer interest is to find a way to transform the current scenario into a mutually beneficial one. This could involve helping consumers develop a stronger understanding of the potential value of their data, and getting them ready to engage with new opportunities.

If consumers are able to exert more control over how their data is used, there is much to gain. We are starting to see initiatives such as midata in the UK, or Green Button in the USA which offer consumers opportunities to have access to, and benefit from, the data that companies currently hold. Despite attracting some controversy because of security and privacy concerns, they are an indication of how personal data is becoming a market in which consumers could take a bigger share.

Our research

As discussed previously, we commissioned ICM to survey 2,002 adults aged over 18 so we could develop a better appreciation of consumers’ understanding of the issue.

One of the things we wanted to test was how consumers felt about some of the new thinking around terms and conditions which effectively reverses the current provider-dominated relationship. It works by getting providers to agree to terms and conditions that are set by an intermediary on behalf the individual, prior to them taking up the service.

Only 8 per cent of respondents were keen on this option, perhaps seeing it as impractical. The preferred option was shorter terms and conditions in plain English and equivalent to no more than two sides of paper (47 per cent). 40 per cent of respondents wanted to use a set of more consumer friendly generic terms and conditions developed by an independent body. Perhaps personalised terms and conditions are only for the early adopters, but the support for conditions written in the consumer interest is strong.

• Want control, but don’t use it

The vast majority of consumers think they should have more control over their data, but only a few use existing controls: Despite limited understanding of what is collected and why, 84 per cent of people want more control over what information organisations collect about them and how it is used. This also came through strongly in Demos’ recent research on public attitudes (www.demos.co.uk/publications/thedatadialogue) towards personal information and data sharing. They found that people would welcome measures to give them more control over personal information, in terms of knowing what is held on them and having the ability to withdraw it. Generally consumers wanted to have a more honest and open dialogue about how their data is used and on what terms.

However, only one in eight consumers says they currently use any form of control panel or dashboard (for example, http://adblockplus.org/en/features) to set their online privacy and personal information collection preferences; most do not know they exist. This could reflect the visibility, accessibility and usability of the tools as well as people’s awareness of them. (The survey took place before regulations requiring cookie consent notices on websites were introduced in May 2012, it is likely that awareness is higher now.)

Mutually beneficial

Earlier I set a challenge to those working in the consumer interest is to find a way to transform the current one-sided scenario into a more mutually beneficial one.

To start to do this, consumer groups could take a bigger role in enabling people to engage with new opportunities and tools in the personal data economy. These have the potential to shift the relationship between providers and consumers onto a more balanced footing. Whilst data protection should always be at the heart of consumer advocacy and empowerment, the status of personal data as such a major new commodity also demands additional attention.

There are question marks over whether the usual routes to protection are still able to adequately regulate the actions of global companies. Think, for example of the threatened fine to Facebook chief Mark Zuckerberg of €20,000 over privacy concerns by the German data protection agency. There are similar doubts as to how effectively regulation can keep up with the fast pace of change online, and how national law can be imposed on a global network.

• Danger of stifling advantages

Too hard a clampdown may well stifle the advantages to be had from effective, consensual sharing of personal data and would almost certainly alienate the large numbers who are comfortable with, and feel they benefit from, sharing. Not to mention very quickly infuriating almost all online users with the possibility of bringing free to use services to an end!

So, are we left with the alternative of accepting that being part of social and economic activity online means giving up autonomy over our personal data, or withdrawing from the online world altogether?

None of these seem particularly productive, and all fail to make possible the benefits of using personal data in a more mutually beneficial way. Doing things differently has potential benefits for consumers. For example using personal data more intelligently could mean personalised, and more responsive, products and services. There are advantages for business too, particularly if they can be part of a more balanced, permissions-based relationship with consumers.

• New opportunities

Taking up opportunities, including but moving beyond data protection, will depend on consumers and consumer groups quickly building a more critical understanding of the:

• current relationship that we are part of online with regards to our personal data, based on a much fuller understanding on what we give up in exchange for what. As part of streamlining consumer protection laws, BIS is considering (see page 21 point 62) whether consumers should have the right to remedies for ‘free’ digital content (eg download/streaming/games) which are supplied without payment of money, but in exchange for something of value other than money such as personal data or virtual currency.
• scale at which personal data is used, and to what end by providers. As well as concerns about an individuals’ personal data and its use, the large scale data and analysis available to providers and the potential for this to shape markets will be a major issue for consumers.
• growth of consumer empowerment and personal data as an emerging market, and how new services and developments via intermediary bodies may work. Helping individuals protect and manage their own data is fast becoming a market in its own right, leading to a growth of business which can help consumers negotiate services and products to their advantage, such as personal information management systems. Such developments enable consumers to have access to their data and share it with parties that put it to work for them.

The increased influence that consumers have due to the potential of digital technology to cheaply and quickly facilitate collaboration and joint action. The web has made possible a more effective way for consumers to participate and achieve goals together. This bypasses the need for traditional institutions and enables consumers to counter powerful interests and exert more control – see previous Consumer Focus research on things like collective switching, using mapping software to identify and fix problems, online feedback and the theory and practice of online collaboration and consumer co-operation. Understanding these new dynamics will require digital literacy in the widest possible sense, what Rheingold would describe as knowing how to participate online for both individual advantage and collective influence.

Increased control

Certainly, our research and the Demos survey both point to consumers wanting to have more control over their personal information. Contrasts (such as wanting more control, despite not using existing controls) could be explained by the lack of tools, services and motivation to do things differently online. What is not yet clear is what the catalyst will be that prompts the majority of consumer to take an active interest in their data. Here are a few suggestions for what might spur on more collective and collaborative action to rebalance the personal data equation:

• Further high profile examples of forcing through changes to terms and conditions changes such as the new terms imposed by Facebook might be the start of the turning point. Instagram’s reversal of a decision to suddenly change its terms and conditions on privacy is also a good example of consumers showing their collectively powerful hand.
• The availability of alternatives such as midata, which is now starting to gain traction as Government looks to put it on a statutory footing may be able to demonstrate what a more balanced personal data relationship looks like in practice. Companies such as Tesco are planning to release back their Clubcard data to customers to enable them to see and make plans on the basis of their shopping habits – just as Tesco have done behind the scenes.
• Greater awareness of the outcome for consumers of businesses applying personal data inferences to prices. In the UK, the Office of Fair Trading is investigating personalised pricing, where inferences about our personal habits and data affect what price we are charged.

Forecasting the potential and impact of digital technology is common practice on the web, with new scenarios and ideas regularly emerging. When considering predictions for personal data (central to so many future developments), we must remember that the way we use digital technology is still in a period of negotiation and development. Certainly, powerful interests have consolidated some control, and are moving to take more, but users and consumers still have a stake in how things develop and an opportunity to influence ways in which they can exert more control over their fate.

There is much to play for if consumers want to make the most of the prized commodity that derives from them, and there is a critical role for consumer advocates to support them. Are you ready for the challenge?

‘We need firms who have the ability to invest in our energy infrastructure, but we also need energy firms who treat and charge consumers fairly and who are transparent about the relationship between their costs and profits.’

‘Whether the economy grows or stagnates, whether the winter is cold or mild, the major energy companies report steady profits, with the occasional dip. The energy industry seems virtually recession-proof. This is not a bad thing. But it is very different to the experience of most consumers who’ve seen prices rise and incomes fall over recent years.

‘Consumers hear that massive new investment is necessary to de-carbonise the UK electricity market and to keep the lights on. They know who will pay the bill for that. The scale of that investment and how to manage the impact on consumers is one of the most pressing issue for energy firms, regulators and government.

‘Greater transparency about industry costs and company profits is going to be critical if consumers are to have confidence in an energy market where prices just seem to go one way.

ENDS

As discussed in my previous blog post, price comparison websites have mushroomed over the past 10 years and are becoming increasingly popular with consumers. According to a recent Harris Poll 67 per cent of consumers who bought or renewed car insurance in the last 12 months used a price comparison website.

Price comparison websites also feature prominently in the Government’s consumer empowerment strategy Better Choice, Better Deals: Consumers powering growth and are seen as key tools to help consumers make better and more informed choices.

However, can consumers trust price comparison websites as a reliable source of information? With a growing array of comparison tools are consumers confused about which sites to use?

To find out more we commissioned eDigitalResearch to carry out a comprehensive mystery shopping survey of price comparison websites. Their report is now available on our website.

It’s an in-depth look at price comparison sites across a range of markets. Perhaps not everyone will want to read about all the markets, but we’d be interested to know your thoughts. Are price comparison websites the best way to help consumers and encourage competition among providers?

What about consumers without internet access, are they missing out?

Should consumers expect that purchasing thorugh price comparison website will save them money? In our research, price comparison sites only saved money in only  21 per cent of cases. Would you expect that figure to be higher?

We looked at energy, mobile phones, broadband, rail fares, package holidays, home and care insurance, but what other markets could, or do, benefit from price comparison tools? What are the lessons that each market could learn from the other?

Transparency

For the sake of transparency, I should mention we have a vested interest in this policy area as for the past four years we have managed a voluntary accreditation scheme for domestic online energy price comparison services known as the Confidence Code. Its objective has been to implement and maintain standards that inspire consumer trust in price comparison sites that cover the energy market. Due to changes in consumer landscape the responsibility for management of the Confidence Code will be moving to Ofgem in the next couple of months.