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Response to the Ofcom on the general conditions relating to consumer protection

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Our response to the Ofcom consultation on the general conditions relating to consumer protection

StepChange Debt Charity welcomes the opportunity to respond to this consultation. We are the largest specialist debt advice charity operating across the UK. In 2016, 600,000 people contacted our telephone helpline or online debt remedy tool for advice and information.

Summary

Our response covers proposals on contracts, debt collection, vulnerable customers and nuisance calls.

 

Contracts and debt collection

  • On average StepChange Debt Charity clients with debts to Communication Providers (CPs) owe £452 per debt and £616 in total (taking into account clients with multiple debts to CPs).
  • A survey of our clients has shown that a third believed they had been treated unfairly by a mobile phone company collecting arrears. It is important that General Conditions on contracts and debt collection work to alleviate these issues and ensure CPs act appropriately.

Vulnerable customers

  • How to deal with vulnerable customers is an increasingly key issue for companies, especially when a credit relationship may be involved. Vulnerable customers are generally more liable to suffer financial harm because they can find it more difficult to understand and defend their rights. Many will even be afraid to reveal their vulnerability because they are afraid they will be exploited.
  • Research indicates that for every customer who does disclose a mental health problem, potentially two customers will choose not to tell out of worry and fear.
  • A broken credit relationship can exacerbate this because debt collection practices create extra stress and complexity. Therefore it is crucial for Ofcom to focus on the need to protect vulnerable customers and ensure that firms’ policies are aligned to this need.

Nuisance calls

  • More than half of adults in Britain (29.5 million people) have received unsolicited phone calls offering high-risk financial products and around one in eight are being called every day.
  • The problem is particularly acute for financially vulnerable people who are already struggling with debt. A survey of our clients found that a third received more than five nuisance calls a week. Where our clients took out high cost credit as a result of these calls it added an average of £1,052 to their existing debts.

 

We would ask Ofcom to consider how to address these problems as part of a consumer protection strategy.

 

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Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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