Research and analysis

Vulnerable consumers: challenges and solutions (Cardiff)

Updated 13 November 2018

On 3 October 2018, the Competition and Markets Authority (CMA) hosted a roundtable discussion in Cardiff on vulnerable consumers.

The roundtable focused on the challenges experienced by vulnerable consumers in Wales and the potential solutions to these challenges. It also covered the possibility of a ‘loyalty penalty’ (long-term customers, usually on default tariffs/roll-over contracts, pay more than new customers in some markets).

Representatives of the Consumer Council for Water, Wales TUC, Children in Wales, Barnado’s Cymru, Wales Council for Voluntary Action, Citizens Advice Wales, Cynnal Cymru/Sustain Wales, Age Cymru, Shared Regulatory Services and Disability Wales attended the roundtable. The discussion was held under Chatham House rules.

The remainder of this summary sets out the main points from the roundtable.

Understanding the challenges

Attendees raised a number of issues when discussing the challenges facing vulnerable consumers.

• The transient nature of consumer vulnerability. Consumers could be vulnerable in different circumstances and at different times eg they might be vulnerable in the event of natural disasters which lead to the loss of their utility services or due to a period of unemployment.
• The need for companies to be able to communicate effectively with vulnerable consumers. Companies might not proactively engage with vulnerable consumers and fully understand the issues they face.
• Some vulnerable consumers may only want to register their vulnerability once rather than have to report this separately to different suppliers.
• Some consumers may not trust suppliers when reporting they are vulnerable and fear they will be penalised and stigmatised.
• Some consumers may not refer to themselves as vulnerable. It is important to use the right terminology so that people are not dissuaded from reporting issues to suppliers and seeking support. It was suggested that it should be recognised that all people have rights.
• Older people are not necessarily vulnerable just on account of their age. However, there may be an issue for some of them accessing some financial services which may not be available to older people. This might prevented some older people from switching service provider. Similarly people with long term-health conditions may have limited choice in relation to some products and services eg insurance.
• A lack of digital skills to access online markets is a key issue. The Welsh government is providing support for some people to develop these skills but there may be gaps. Some younger people (16-24 year olds) have reported inconsistent access to digital technology such as mobile phones because they rely on pay-as-you-go services. Young people leaving care, whose living situation is unstable, may particularly have inconsistent access. There may also be issues with patchy mobile phone reception in some rural areas. Other consumers, such as low paid manual workers, may have limited experience using computers.
• Alongside digital skills, some adults may also lack numeracy and literacy skills which can limit their engagement as consumers. Work is taking place to improve adult literacy and numeracy but more could be done.
• Single parents may be a particular group of consumers who face challenges and need more support.
• For physically disabled consumers, assisted technology can be a barrier to digital inclusion. Physically disabled consumers may pay more for some assisted technologies such as scooters because of a lack of choice and competition. At the same time, physically disabled consumers may not be able to work and have lower incomes than other consumers.
• There can be issues with scams and some consumers not fully understanding contractual terms and conditions for goods and services. There is a particular issue with ‘subscription traps’; some consumers may think they have signed up to a trial for service which they can cancel but then find this is not the case. Redress for such situations may be unclear.
• Some consumers need better access to Welsh language services and advocacy. Older people who suffer from dementia whose first language is Welsh may particularly need help when communicating with suppliers and making choices in different markets.
• Consumers in Wales may be more loyal to Welsh companies or suppliers with Welsh branding eg Welsh Water has had a higher trust rating than other water companies. Such consumers may pay more to receive goods and services from Welsh or Welsh branded suppliers.
• Consumers on low incomes may face particular challenges. They may suffer from food and fuel poverty. They may struggle with irregular work eg zero hour contracts. Other challenges may include debt, food poverty and accessing sufficient childcare. They may turn to illegal money lending options. Recent welfare reforms may exacerbate the challenges faced by these consumers.
• In relation to the ‘loyalty penalty’, some consumers may not switch supplier because they are unaware that they can switch or because they find it difficult to switch. Sometimes consumers may also be deterred from switching supplier because the potential financial saving is minimal.
• Some vulnerable consumers are facing significant challenges in their daily lives which are far more important than whether or not to switch supplier. Such consumers should not have to be responsible for ensuring they are on the best deals. They should not be penalised by suppliers who know they will not switch so can charge them higher prices.
• For some older people, there may be fewer options to switch in some markets eg they may not have access to a full range of car and holiday insurance products because of their age. They may find an insurance company that will supply products to them and decide to stick with them because there are few alternative suppliers.

Addressing the challenges

Attendees raised various issues when discussing potential solutions to address the challenges facing vulnerable consumers.

• The importance of organisations and companies sharing good practice on how best to support consumers who may be vulnerable. There should be one forum to gather information on the issues and share solutions.
• Vulnerable consumers should be involved in testing and rating goods and services so these are better designed to suit their needs.
• There should be a focus on raising awareness amongst consumers who may be vulnerable of the support that may be available to them from local authorities, consumer groups and charities.
• Plug-in devices (‘call blockers’) on telephones can help consumers, often older people, who may suffer from high volumes of telephone scams.
• It is important that there remain physical places for consumers, especially older people, to shop. The growth in ‘virtual’ markets may be leading to more isolation and greater vulnerability for some older consumers.