Consumer insight report A Scottish consumer snapshot 2016
Introduction to Which? Which? is the largest consumer organisation in the UK, with more than 1.5 million members and supporters. We exist to make individuals as powerful as the organisations they have to deal with in their daily lives. We achieve change by providing information and impartial advice that puts people in control, by providing services and products that put consumers needs first to bring them better value and through running campaigns that make people s lives fairer, simpler and safer. We operate as a group social enterprise whose growing work on behalf of all consumers is funded solely by our commercial ventures. We are completely independent and receive no government money, donations from the public, or any other fundraising income. Which? in Scotland Which? has been active in Scotland since 1999, working on both UK and uniquely Scottish consumer issues from our Edinburgh office. We have campaigned on a wide range of issues that matter to consumers, including health, housing, food and getting justice for consumers who have experienced poor quality goods and services. We successfully campaigned to help improve access to NHS dentistry, for the introduction of Home Reports to provide better information to Scottish homebuyers, and drove forward the first national food hygiene scheme to inform the public about food safety in schools, restaurants and takeaways. We also pursued the first super-complaint in Scotland, to open up competition in legal services and drive down costs for consumers. Scottish context Since May 2016, the Scottish Government has had new powers over consumer advocacy and advice. It has committed to helping ensure better outcomes for Scottish consumers when they engage in public or private markets, as well as setting up a new consumer body, Consumer Scotland. At Which? we also want to ensure the best outcomes for consumers in Scotland, by ensuring the Scottish Government uses its powers and influence to shape a pro-consumer landscape. 2 of 13
Executive Summary In the last year, Holyrood has gained new powers in a range of new areas. This includes powers that could make a difference to every Scot in a key area of their everyday lives the products they buy and the services they use. As the Scottish Government starts to consider how it will use its new powers for consumer advocacy and advice, Which? has conducted research to gain a better understanding of the issues that Scottish consumers face. We ve looked at how they behave when they interact with certain markets, the problems they experience, and the geographical and social factors that particularly affect them. We have looked at their levels of financial distress, top worries, trust in different industries, and their experiences of essential and public service markets. We want these findings to help the Government to shape their future plans. In particular we want to see a dynamic, well-resourced new consumer champion that can press for changes that really address the consumer issues that affect the lives of people in Scotland. We know that Scottish residents often experience similar problems to people in the rest of the UK, whether its challenges with their energy bills, poor customer service in their banks or slow broadband speeds. Problems with switching providers and a lack of trust in essential markets is also a common theme. But we also know that people living in Scotland experience problems unique to their geography or financial situation, for example, with higher delivery charges, or in the energy market where there are larger numbers off the gas grid and more households on prepayment meters which makes switching tariff or provider even harder. Or in the banking or telecoms sector, where many people simply do not have access to anything other than one bank branch or one broadband provider. Our research shows that levels of switching in many sectors is low amongst Scottish consumers, and that a surprising number of people took no action when they had a problem with a service. In public service markets, for example, 39% took no action when they had a problem, with many feeling nothing would be done if they did. Scottish consumers need an advocate, and they need better advice to help empower them make better decisions. This is why there is a great opportunity with these new powers and a new consumer landscape in Scotland to ensure that consumers get the best outcomes possible. The SNP s 2016 manifesto grasped this fact, and committed to a body that will be given the powers to carry out research and representation and will use evidence, expertise and knowledge to stand up for consumers. The top concern for Scottish people was about public spending cuts, with worries about interest rates on savings, and daily essentials such as fuel and energy prices following closely behind. People in Scotland were also concerned about the interest rates on their savings and the value of their pensions. 3 of 13
Profile: The Scottish consumer There are approximately 5.3 million people living in Scotland. The large majority of these are consumers interacting with markets, either public or private, on a regular basis. The Scottish Government defines a consumer as anyone who buys goods or digital content, or uses goods or services either in the private or public sector, now or in the future. We agree with this definition. We know that, like consumers across the UK, Scottish people typically experience a wide range of issues and concerns within private and public markets. Many also are not aware of their rights as consumers and who to turn to for help. However, there are also distinct economic, social and geographical circumstances which mean that the typical Scottish consumer may engage in a market in a different way than those elsewhere in the UK. Issues such as geographical location, social deprivation or provision of infrastructure and information to be able to make good consumer decisions all affect the way Scottish people interact in a market. Similarly, decisions made by businesses, regulators or policy-makers, either in Westminster or Holyrood that impact upon a market may affect Scottish consumers in a different way. Methodology Which? commissioned YouGov Plc to conduct an online survey of 1007 adult residents of Scotland (18+) between 18th and 23rd August 2016 to establish a broader picture of the Scottish consumer for this report. Data were weighted to be demographically representative. To measure Financial Distress, we used data from Which? s Consumer Insight Tracker, a regular poll for Which? of UK adults. As part of the Tracker, we surveyed 12,008 people between January and December 2015 and asked about their financial experiences. With this data, we are able to provide a uniquely detailed picture of Scottish consumers behaviour and sentiment in the current economic climate. Estimates of sentiment were calculated for each 2011 Output Area Classification group, extrapolated down to individual output areas, and averages calculated for each constituency and region. For a unique view of Scottish constituencies, see consumerinsight.which.co.uk/ scotland-constituency. To measure consumer worry and trust, we looked at the Scottish data from our September 2016 tracker, a poll of approx. 2000 UK adults. 4 of 13
Financial distress Our data shows that many people in Scotland are still feeling the pinch, and our evidence points to particular problems in urban areas, particularly in Glasgow and, to a lesser extent, Edinburgh. Using data from Which? s consumer insight tracker polling, we created a Financial Distress Index, which estimates the extent to which households in an area are experiencing financial difficulty relative to all other areas. The index is made up of five levels of financial distress: Cutting back only Using savings and cutting back Cutting back and borrowing from friends/family/creditors Risky borrowing Defaulting on bills/housing Our Financial Distress model shows the 10 most financially distressed constituencies in Scotland are: The Financial Distress model shows the 10 least distressed constituencies in Scotland are: 4 2 1 4 8 2 1 9 3 7 5 6 5 3 8 10 7 6 9 10 1 Glasgow Maryhill 6 Glasgow Pollok 1 Na h-eileanan an Iar 7 Skye, Lochaber and Badenoch and Springburn 7 Edinburgh Northern 2 Orkney 8 Caithness, Sutherland and Ross 2 Glasgow Southside and Leith 3 Aberdeenshire West 9 Perthshire South 3 Glasgow Provan 8 Glasgow Kelvin 4 Shetland and Kinross-shire 4 Glasgow Annielsand 9 Glasgow Shettleston 5 Aberdeenshire East 10 Dumfriesshire 5 Glasgow Cathcart 10 Greenock and Inverclyde 6 Eastwood 5 of 13
Top consumer worries Our data shows that people in Scotland demonstrated a greater level of concern about consumer issues than those in the rest of the UK. The top concern for Scottish people was about public spending cuts, with worries about daily essentials such as fuel and energy prices following closely behind. People in Scotland were also concerned about the interest rates on their savings and the value of their pensions. The Scottish rankings are similar to those in the rest of the UK, but some differences do arise, for example energy and fuel prices rank higher in Scotland than the rest of the UK. Brexit also appears to be of higher consumer concern in Scotland than in the rest of the UK. Using Which? s September 2016 Consumer Insight Tracker data, we gathered information about what worries Scottish consumers. The percentage in brackets shows the proportion of people asked who were worried about a particular issue. Scotland Public spending cuts (74%) Interest rates on savings (67%) Energy prices (67%) Fuel prices (64%) Pension values (61%) Future tax levels (60%) Quality of public services (60%) Food prices (59%) Brexit (52%) Mortgage rates (47%) Level of household savings and investments (45%) The exchange rate of the pound (40%) Rest of UK (excluding Scotland) Public spending cuts (62%) Interest rates on savings (59%) Energy prices (56%) Pension values (56%) The quality of public services (55%) Fuel prices (55%) Future tax levels (51%) Food prices (50%) Levels of household savings and investments (48%) The exchange rate of the pound (44%) Mortgage rates (43%) Levels of household debt (39%) 6 of 13
Levels of trust in industries Our data shows that the water industry (home supply) rates the most trusted sector among Scottish consumers, followed by the food/grocery sector and technology appliances, two very different industries altogether. At the bottom of the table, we found that car dealers in Scotland are highly mistrusted, together with energy companies and those in the financial sector. It is important that consumers trust organisations and industries to do the best for their customers. A healthy consumer landscape relies on informed, empowered consumers who trust the organisations and businesses they deal with to treat them correctly. Low levels of trust erode confidence, affect the economy, and reflect badly on business. Using Which? s Consumer Insight Tracker polling data for September 2016, we gathered information about their level of trust Scots have in certain industries or sectors. The percentage shows the proportion of people who trust a certain industry. The industry sector / organisations most trusted in Scotland are: 68% 62% 59% Water Food/grocery sector and Technology appliances Domestic appliances The industry sector / organisations most distrusted in Scotland are: Car dealers 59% Long-term financial products 38% Energy companies and Day to day banking 36% 36 7 of 13
Experiences of essential markets telecoms, energy, banking In our survey, we asked people what products they used in markets considered essential, such as home internet, energy and banking. We also asked about their attitudes to switching, problems they had experienced in these sectors, and how they sought to resolve them. Our data shows that levels of switching is low amongst Scottish consumers across the three industries we looked at. The kind of problems Scottish consumers face often relate to their geography (e.g. poor broadband connections), to their rurality (e.g. closure of their local bank branch), or even basic consumer transaction problems (e.g. poor customer service in banking or energy). In general, most people who experienced problems complained over the telephone at the time, but a large number of people took no action at all when they experienced a problem, sensing that no action would be taken as a result of a complaint. Proportion who have switched in last five years Home internet connection Gas and electricity Main current account 33% (Of those with an internet connection at home) 23% (Of those with gas and electricity) 18% (Of those with a current account, answering about their main one) Proportion who have NOT switched in the last five years Proportion who have had problems in last two years Proportion who have NOT had problems in last two years 62% (Of those with an internet connection at home) 44% (Of those with an internet connection at home and with their current provider) 48% (Of those with an internet connection at home and with their current provider) Top three problems Intermittent connection (27%) Top action taken among those who had a problem Proportion who took no action when they had a problem Top reason for no action among those Slow speed (24%) Unable to connect (22%) (Of those who have an internet connection at home, an issue with any provider) Complained over phone at time (46%) (The most recent problem) 68% (Of those with gas and electricity) 8% (Of those with gas and electricity as their main supplier) 80% (Of those with gas and electricity as their main supplier) Billing (47%) Poor customer service (33%) Meter problems (18%) (Of those who experienced an issue with their current provider) Complained over phone at time (55%) (The most recent problem) 79% (Of those with a current account, answering about their main one) 5% (Of those with a current account, answering about their main one) 86% 39% 21% 32% (Of those with a current account, answering about their main one) Poor customer service (24%) Money taken fraudulently (14%) Closure of local branch (13%) (Of those who ever experienced a problem with their main current account provider) Complained in person (20%), or called the provider s helpline (20%) (Of those who experienced a problem) Not worth the effort (31%) Not worth the effort (28%) 8 of 13
Home internet Increasingly, many consumers are turning to the internet to buy goods, or use public services. Whether it s paying bills or buying groceries online, applying for a school place or complaining online about poor service, the internet is increasingly being seen as an essential service for many. According to Ofcom, 65% of internet users in Scotland claimed to shop online for goods, services, tickets, etc, a similar proportion as in the rest of the UK. 89% of those we surveyed had an internet connection at home. 42% had standard broadband through a phone line. 32% had fibre optic broadband. 11% had cable connection. 3% satellite. 1% dial-up. A majority have not switched internet providers in the last 5 years. 62% of people we surveyed had not changed their internet providers in the last five years, compared to 33% who had. 44% of people have had problems in the last two years, and the most common one relates to connections 44% have had a problem with their home internet connection in the last two years, and 48% did not. 73% have never had a problem with their connection. The most common problems with home internet are related to intermittent connection (27%), slow speed (24%) or unable to connect for a few minutes, but no longer than a day (22%). Almost half of those who experienced a problem complained at the time, but many took no action at all. Many of them felt it wasn t worth the effort of complaining. Of those who had a had a problem with their home internet provider. Nearly half (46%) complained over the phone at the time. Four in 10 (39%) didn t take any action to resolve the problem. The top three reasons that people give for why they didn t complain to their internet provider were they did not feel it would be worth it (31%), the problem rectified itself before they got around to contacting them (27%), and it didn t bother them enough to complain (22%). Energy One of life s essentials, gas and electricity provision is a service most consumers rely on. The recent CMA energy market investigation showed that many people are on the wrong tariff, or not able to switch. The CMA indicated that this problem was more pronounced in Scotland. Which? s Fair Energy Prices campaign aims to fix the broken energy market, to make switching easier and get companies to do more to protect the most vulnerable stuck on standard tariffs. 93% of those we surveyed have electricity supply in their homes, and 76% have gas supply. 4% use oil. The top suppliers amongst respondents are Scottish Power (25%), British/Scottish Gas (22%) and SSE/Scottish Hydro (17%). 85% of those with both electricity and gas use the same supplier, and the most common tariff on dual fuel was fixed term (64%). 68% of people have not switched supplier in the last five years. The top reason for not switching was that there wasn t enough difference between suppliers. 68% have not switched gas and electricity supplier in the last five years. In the last five years, 23% considered switching supplier and did. Of those who had switched supplier, the top three things that prompted them into switching were: becoming aware of cheaper deals (47%), a fixed tariff coming to an end (26%), and a tariff price increase (20%). The top three reason people didn t switch supplier were: that there wasn t enough difference between suppliers to make it worthwhile (23%), thinking they were on the best tariff already (19%), and that the amount saved wouldn t be enough (18%). The majority don t have any problems with their energy supplier, but those that did, have experienced billing problems or poor customer service. 80% of those who have gas and electricity did not experience problems in the last two years, and 8% did experience a problem. Of those who had experienced a problem four in 10 (43%) people had a problem in the last 12 months. The top three problems experienced with an energy supplier were: billing problems (47%), poor customer service (33%), and problems with meters (18%). 9 of 13
Most people who experienced a problem complained at the time, but a fifth took no action at all. The top actions people took when they had experienced their most recent problem were: complaining over the phone at the time (55%), using an online form to complain (21%), and writing a letter to complain (20%). Two in 10 (21%) didn t do anything in particular. Banking As we discovered in our consumer trust survey, banking does not rate highly as an industry that Scottish consumers trust. Which? s Better Banks campaign aims to shake up the banking system to ensure banks treat their customers more fairly and improve their customer service. The CMA s recent banking remedies laid out plans to ensure banks do more to help people manage their money better, and help people switch accounts more easily. The top four banks people hold their main current accounts with are Bank of Scotland (26%), Lloyds TSB (10%), Santander (9%), and Clydesdale Bank (8%). Four in 10 Scots have never switched current account providers, and 38% had done so, but over 5 years ago. 41% had never switched current account providers 18% have switched their main current account in the last five years and 79% have not done so in the last five years. 38% had done so, but over five years ago. Of those who had considered but hadn t switched current account providers in the last two years the top reasons were: There wasn t an account competitive to make them switch (30%), it seemed difficult/ complicated to switch (25%), and they found they were on the best current account for them (18%). Of those who had not switched or considered switching current account providers in the last two years the top reasons were: They thought they were on the best current account for them (36%), they didn t think there would be an account competitive enough to switch (23%), and it seemed too difficult to switch (16%). A large majority have never had any problems with their bank, but those that have experienced poor customer service or were victims of fraud. Of those who hold a current account, only 5% have had problems in the last two years. 73% had never experienced a problem. Of those who had experienced a problem poor customer service was the most common (24%). One in seven (14%) had money taken fraudulently from their account and one in seven (13%) experienced closure of a local branch. Two in ten complained there and then about their most recent problem, but three in ten took no action to complain when they experienced a problem. 20% complained in person at the time and 20% called the helpline to complain. 32% didn t do anything in particular to complain when they experienced a problem. The top reasons that people didn t do anything when they experienced their most recent problem were they did not feel it would be worth the effort (28%), it didn t bother them enough to complain (25%), and they did not feel that anything would be done (17%) 10 of 13
Experiences of public service markets Many people do not see themselves as consumers of public services, but they should the Scottish Government defines consumers as those who buy goods or use public services. At the heart of all public services is the need to deliver in the patients or users interest. Scottish public services have undergone significant reform, with the integration of Health and Social Care being the most recent. And with an ageing population and budgetary pressures on many services, there are many demands on the system, including the need to be more responsive to the users of those services. In our survey, we asked people what services they used most, whether they had experienced problems in these sectors and whether and how they sought to resolve them. Proportion who have had problems in last two years Proportion who have NOT had problems in last two years Public services 10% (Of those who have used a public service) 79% (Of those who have used a public service) Top three problems Poor standard (44%) Top action taken as a result of problem Proportion who took no action when they had a problem Top reason for no action Waiting time (20%) Unavailability of service (15%) (Of those who experienced a problem) Complained in person at time (18%) 39% Did not feel anything would be done (40%) Seven in 10 have never experienced a problem, but for those who had, most were about poor standards or waiting times. 67% of people have never experienced a problem with public services. The top problems experienced by those who had had a problem are: the service not being of a good standard (44%), they were waiting a long time for the service (20%), and they were unable to get the service they needed (15%). A significant number of Scots didn t complain about a problem with a public service. The majority of them felt nothing would be done. Four in 10 (39%) people didn t do anything in particular when they experienced a problem with a public service. Two in 10 (18%) complained in person then and there. The top reasons people didn t do anything when they experienced a problem were: they did not feel anything would be done (40%), they did not feel it would be worth the effort (22%), and it didn t bother them enough to complain (21%). The most used public services are GPs (92%) and dentists (89%). The least used are home/social care (4%) and care homes (3%). 11 of 13
Policy recommendations Which? welcomes the SNP s 2016 manifesto commitment to support consumer rights once consumer advice and advocacy powers are devolved to the Scottish Parliament we will develop a Consumer and Competition Strategy and legislate to create a unified consumer body. This body will be given the powers to carry out research and representation and will use evidence, expertise and knowledge to stand up for consumers. Shaping the new Scottish consumer landscape will be a significant project for the Scottish Government in the course of this Parliament. The objective of a new Scottish consumer strategy should be to enable: Empowered, confident consumers: people are better informed of their rights, able to secure prompt redress (with those less able to engage in markets receiving targeted and appropriate support) and readily able to access top quality, independent, trustworthy sources of information including aids to comparison and switching that support firms that treat their customers fairly. Companies that engage positively with their customers: firms take account of customers views and needs in their operations, and offer effective redress when things go wrong. Effective enforcement: co-ordinated enforcement that is intelligence-led and effectively matches skills, expertise and resources to the areas where there is most risk and potentially consumer detriment. Competitive markets: firms that treat customers fairly are supported and lauded, driving out the bad, and raising standards for transparency, fairness and sales practice, with markets open for new entry (at all scales) and exit. Which? welcomes proposals to set up a new statutory, unified consumer body to help consumers in Scotland navigate this consumer landscape. It must be a onestop shop to help signpost consumers in the right direction, empower them to switch products and push companies to be more responsive to their consumers. It must also ensure that UK regulators are adequately representing the interests of Scottish consumers. In order to do this, Consumer Scotland must have the right governance structure, have the necessary powers and duties and given the means to take action to protect consumers. Its success will be measured on whether it achieves better outcomes for Scottish consumers. Which? believes Consumer Scotland should: Be a strong consumer advocate, free to challenge policy, and focussed on achieving real outcomes for consumers. Strengthen links, coordination and oversight across the different aspects of consumers engagement in a market. Have the necessary powers to gather data and intelligence about consumer detriment, both in public and private markets. Have sufficient technical policy and research expertise to identify gaps in provision. Be able to advocate on Scottish consumer issues through good links to both Scottish and UK regulators and governments. Work well with others in the landscape, such as Which?, Citizens Advice Scotland and Trading Standards Scotland. Be proficient in horizon scanning in order to identify emerging issues. Ensure transparency of prioritisation. Ensure consumer research and insight is ongoing and regular, testing innovative approaches. 12 of 13
For more informations contact: Eva Groeneveld, Head of Public Affairs (Scotland) Which in Scotland, Strathmore Business Centre 10 York Place, Edinburgh, EH1 3EP Scotland@which.co.uk 0131 5231341 13 of 13