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Stephen McDonald
Head of Economics
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Consumer harm in the UK: What does the Consumer Detriment Study tell us?

Whether it’s dud products, broadband that drops out, or cancelled travel plans, most of us have first-hand experience of consumer problems. It can be difficult to know how widespread those problems are, but the government has recently published a study on the incidence and scale of consumer problems in the UK. The research, carried out by NatCen, is possibly the most comprehensive ever undertaken to understand the harm faced by consumers across the UK. 


In April and May of 2021, more than 6,500 people from all nations in the UK were asked about their experiences of suffering detriment from their purchases of goods and services in the previous year. The study tells us a great deal about the problems consumers experience, and the challenges they face in resolving them. In this blog we set out four key findings.



The amount of consumer detriment is huge


It’s disappointingly common for people to have problems with the products and services that they buy. Almost seven in ten people reported having at least one experience of consumer detriment over the course of the year, and scaled up to the whole UK population that equates to 36 million people. An average consumer reported four experiences of detriment, equivalent to something going wrong once every three months.


The study estimates that the estimated total number of incidents of consumer detriment in the UK for the whole year was about 230 million, with an estimated total annual value of consumer detriment of more than £54 billion. To put this into context, it is of equivalent value to about 4.3% of all household consumption in the UK in 2020.


However, as large as these numbers are, we need to recognise that they reflect only a lower bound on how much harm UK consumers are experiencing. These are only the incidents of which consumers are aware, but often harm is hidden. For example, consumers are unlikely to know if prices are high because businesses behave anti-competitively or if they are misled into buying a more expensive or lower quality product.



Covid-19 contributed to, but doesn’t excuse the problems consumers experienced


Inevitably, since the study period covered the first year of the pandemic, many of the incidents of consumer detriment were impacted by the disruption caused by it. Consumers thought that 13% of incidents were mostly or fully caused by covid-19 and 30% of incidents were made worse by it.


However, the impact of the pandemic varied substantially across sectors. It played a role in more than 95% of detrimental incidents in the airlines and package holidays sectors. 


The fact that the survey relates to this unprecedented, and hopefully never to be repeated, period in our lives means that interpretation of the results is harder. It created incredibly challenging circumstances for many businesses, but we know that customers’ experiences were better with some firms than with others. While some businesses built consumer trust with their skillful handling of the situation, other firms failed to fulfil their basic legal obligations.



Most consumers suffer emotionally when things go wrong


The survey found that 83% of incidents of consumer detriment triggered at least one negative emotion. For two thirds of people (66%) it led to them feeling upset, while more than half (54%) felt anxious as a result. 


In some cases the impact on health can be substantial. Almost one in ten people (9%) said the detrimental incidents had a very negative impact on their mental health, and one in twenty (5%) said it had a very negative impact on their physical health.


In some cases, the frequency of emotional harm is clearly related to the nature of the product. Emotional harm was most frequent in housing-related services and personal services, which includes adult care and childcare. It is unsurprising that when things go wrong in these markets there will be an emotional impact. 


However, in other cases the frequency of emotional impact is less obvious and it may point to fundamental and underlying market problems. About two-thirds of people (66%) said they felt helpless and misled when encountering problems with telecoms and other digital subscriptions.



Consumer detriment will worsen the cost of living crisis, and vice versa


With sharply rising prices across many sectors, but especially for energy and food, a majority of households are working harder to manage their budget. The Consumer Protection Study suggests there will be a two-way relationship between experiences of consumer harm and the current cost of living crisis.


First, experiences of consumer detriment can have a negative impact on the household finances. The study found this was the case for 21% of incidents. When consumers are already struggling to manage financially this could lead to substantial additional harm.


Second, people struggling financially were more likely to experience detriment. 86% of people who said they were finding it very difficult to manage financially experienced detriment. This compares to 66% of those living comfortably. 


The impact of detrimental incidents was also more severe for people who were struggling financially. 28% of those finding it very difficult financially said the detrimental incident had a very negative effect on their mental health, compared to just 5% of people who were living comfortably.


These are just a small selection of the findings from the Consumer Protection Study. The report contains substantially more and future, more granular analysis of the data will give greater insight, especially into harm in specific sectors and markets. 


However, the results already demonstrate the pressing need for government action to improve the UK’s consumer protection regime. It’s not possible to eliminate all consumer detriment, but the government has proposed a range of measures that should help, including empowering the Competition and Markets to be able to properly enforce consumer law. The government now needs to legislate as soon as possible to implement these. As the Consumer Protection Study shows, consumers are suffering billions of pounds of harm with every month that passes

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