SMUG MONEY: “The cheapest company doesn’t always offer the best value”

Written by Rebecca O'Connor on 19th January 2016

Three quarters of us feel powerless, half of us want to switch but can’t face the hassle, 70% of us think we spend too much time on the phone to customer services trying to sort stuff out (and we do – a collective 45 million hours a year in the UK, with a typical call taking 30 minutes).

All of these very January-ish findings have come from the Centre for Economics and Business Research (Cebr) commissioned by B.Heard, the first value comparison site in the UK. It’s enough to make you want to live in the woods.

The survey authors concluded that the UK has become a nation of ‘silent sufferers’, receiving poor service from the companies they depend on – including banks, phone, energy and insurance companies – but have given up complaining because they no longer believe their voices will be heard.

What on earth has gone wrong? There are a few structural problems with the UK’s most consumer-(dis)serving markets worth hitting on here:

  1. Competition. There isn’t enough. The home TV, phone and broadband market especially – at least there are some large challengers in energy and banking (Ovo and Metro, for example). But phone and broadband is dominated by just 4 providers, BT, Sky, Virgin, TalkTalk. If you can’t have Virgin because you don’t have cable, then you have only three to choose from. To have Sky, you need to have a clear space between the dish and the sky. If you don’t have this either, that’s a choice of two. And all are dependent on BT lines anyway. So BT really holds the cards and controls how much you pay every month for your household comms. The sector is about to become even less competitive, as BT is set to take over EE. There is a regulator. It is Ofcom. We’re pretty sure about the “Off” bit… And we are still along way off what could be described as healthy competition in banking and energy, with barriers to entry such as high costs that leave all but the most well-capitalised challengers at the door. The good thing is: they are knocking louder and louder (See here for our current account alternatives to the Big Four guide and here for our piece on better energy deals from smaller, cleaner competitors.)
  2. Chasing the cheapest deals. We want cheap? We get cheap. But what comes with those loss-leading deals is the ever present threat of price hikes, which are often poorly communicated when they do eventually happen (and they nearly always do). And also poor service.  The Cebr study reveals that consumer resentment of poor service has led to some 66% of people believing “the cheapest company doesn’t always offer the best value.” Although to be fair, because of point 1, above, even the more expensive deals tend to come with poor service. Why bother when you don’t have to try, hey?
  3. Sabotage. Complaining is made so hard that we just can’t face it, according to B.Heard. Understandably – we have lives to lead and don’t want to sit on the phone pressing buttons for hours, only to be cut off. The providers know this (let’s not be naive) and while those call centres may be manned by lovely students and young grandmas who are not at all evil, the system, unfortunately, is. Really. I used to be a consumer champion columnist at a national newspaper – when I called up, 99% of cases were resolved to the customer’s satisfaction within a matter of days. Amazing what companies can do when the prospect of a bit of bad press is dangling over their sales targets.

This is the most enervating line in the report: “In the context of spending time with family, dealing with customer service departments is reckoned by consumers to be so time-consuming that it can make the difference between a working parent seeing their children before bed, or not.”

..”Sorry William, I can’t play dinosaurs with you. No, I can’t read that bedtime story either. I’m still on hold to BT….” I’ve said it myself.

Shout up if your response to this is WTF – and get your bad selves over to B.Heard now, to be heard, innit.