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Poor service costing the UK £37bn as customer complaints soar

15th Feb 2017

The UK’s Ombudsman Service has released findings from its fourth annual Consumer Action Monitor, stating that complaints through its services have risen by 3m over the last 12 months – to 55m in total – and that the cost to businesses is estimated to be as much as £37 billion a year.

The retail sector received the lion’s share of complaints last year – roughly a quarter of all the issues logged – followed by telecoms, energy, transport and banking:

  1. Shops - made up 24% of complaints - costing £10.05 billion.
  2. Telecoms - 13% - costing £2.98 billion.
  3. Energy - 10% - £5.2 billion.
  4. Transport - 7% - £5.51 billion.
  5. Banking and financial services 7% - £5.81 billion.

The Chief Ombudsman, Lewis Shand Smith stated in a blog post that the Ombudsman Services’ measure of the financial impact of complaints was a new initiative which he hoped would shock businesses into addressing their approach to customer service:

“This cost demonstrates that some consumers are choosing to vote with their feet and leave brands that do not provide them with an acceptable standard of consumer service.

“At the moment, consumers feel that complaining is often a waste of their time, because they see no change in the behaviour of big business. By putting consumers at the heart of what they do, businesses can prevent consumers from taking their custom elsewhere, which is good for both parties.

“As we move towards leaving the EU it is critical that protection for UK consumers remains, but it could also provide an opportunity to enhance and improve what’s already in place. It’s crucial that consumers continue to feel empowered to raise complaints, that those complaints are handled well by providers, and that there’s easy access to an ombudsman where the customer remains dissatisfied.”

Smith also claimed that the impact would be far greater were it not for industries, such as rail, having a monopoly on the service they offer.

“Rail ranks poorly for consumer sentiment, as long-term and highly publicised problems in the sector have left one in five (20%) resigned to poor service. Complaints have increased by 30%, and in this sector many consumers do not have the option of switching provider, which leaves them feeling disillusioned.

“Despite some consumers showing they are willing to take action if they are being let down by a company, there are many more who are sweeping their complaints under the rug. Our research shows that a further 75 million issues were ignored due to apathy and long-term disillusionment with businesses.”

To try and tackle this issue Ombudsman launched a new branch - The Consumer Ombudsman service – in 2015, in order to better deal with complains in the retail sector, alongside home maintenance, improvement or installation services, second-hand cars, car repairs and car servicing.

Yet the latest report suggests companies are still making complaints difficult for their customers – more than a quarter of people say they often ‘can’t be bothered to complain’ whilst 44% say it’s ‘too much hassle’. 19% say they don’t believe companies listen to them.

Jo Causon, CEO of the Institute of Customer Service, stated at the time that too many businesses were prioritising their customers’ transactions before their interactions:

“Too often [executive] boards are focused on short-term sales, rather than a consistent and sustained focus on the whole customer experience that will lead to loyalty, recommendation and repeat purchase,” she said.

“It means that in a climate of rising customer expectations, an organisation's ability to deal with complaints is under the spotlight, so anything that helps customers navigate their way through a problem is welcome.

“However, if we are to see complaints fall, it is imperative that UK plc focuses less on transactions and more on building relationships with their customers. The longer we wait for this to happen, the more difficult it will be to implement.”

The latest findings suggest this continues to ring true.

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