Consumers are losing about a tenth of their earnings through problems with faulty goods, bad business practice and poor service, Citizens Advice said on Tuesday.
The charity, which offers advice over the phone and via its website as well as at 3,500 offices, said £1 in every £10.60 earned was being lost as a result of poor practice by firms.
Each year, Citizens Advice deals with 1.4m problems related to consumer goods, services and credit and its consumer service receives calls at a rate of 3,000 a day.
Despite telecoms prices going down, the charity said the subject was now the fourth biggest issue it helped with, overtaking furniture as a source of complaints.
The top five sources of consumer problems, apart from credit, were secondhand cars, home improvements, energy, telecoms and furniture. One in four people seeking help had lost £600 or more, while one client faced losing up to £33,000 due to problems with a motor home.
In a report entitled Consumer Challenges 2015, Citizens Advice said consumers who had been in touch had lost an average of £250. For the poorest fifth of households the loss was the equivalent of 19% of their monthly income.
Gillian Guy, chief executive of Citizens Advice, suggested that the losses would offset some of the benefits consumers were feeling from falling inflation and the economic recovery.
“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,” she said.
“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. As a recovery takes hold, particularly with public spending so tight, industry, government and regulators need to help households by fixing failures in consumer markets.”
The report also showed how council tax debt has overtaken credit card debt as the biggest cause of problems for consumers. It said it expected to deal with 191,400 council tax debt issues in 2014/15 – a 20% increase on the previous year. Consumers are also struggling with rising rents, it said, with the number of rental debts reported to the on track to reach 122,800 by the end of March. This is a 5% increase on the previous financial year’s figure. Meanwhile, credit card debts are set to drop by 12% to 155,700 over the year.
There has been an increase in the number of clients approaching Citizens Advice with all types of priority debts. While the proportion of debt issues around credit cards, mortgages and unsecured personal loans has declined, more clients have been seeking help with rent, council tax, water and fuel debts.
However, in recent years issues around benefits had overtaken debt as a source of problems driving clients to its bureaux around the country. As the economic crisis began in 2008, debt issues made up 32% of issues while benefits and tax credit issues accounted for 27% of problems; by the end of 2012 it said this had switched to 29% and 37% respectively, Citizens Advice said.
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