Which? publishes report calling for reform of UK consumer protections to support economic growth

Which? published a policy report, "Consumer protections and economic growth", in September 2022, arguing that consumer protections should be treated as a tool for raising productivity rather than a burden on business¹. The report is written by Matt Gardner, Stephen McDonald and Rocio Concha, with a foreword by Concha as Director of Policy and Advocacy and Chief Economist¹.

The report says consumer spending accounts for around 60% of UK economic output, so even minor gains could have large consequences¹. It argues that weak productivity growth since the 2007 financial crisis has held down real household disposable incomes, and that the stagnation has been particularly acute in the UK compared with other G7 nations¹. It also says poor income growth over the past 15 years means the cost of living crisis is biting harder, with increasing numbers of households facing financial hardship¹.

The report sets out three changes it says are needed for consumer protections to be effective: updating consumer protection rules so they offer adequate protection online; giving the Competition and Markets Authority tougher powers to clamp down on companies failing to comply with consumer protection laws; and making alternative dispute resolution available more widely, with simpler and more consistent processes¹. It says the alternatives, such as dragging claims through courts, have been proven ineffective and are time-consuming and resource intensive¹.

The report cites examples of consumer harms it links to search and switching costs, including subscription contracts where consumers can be automatically renewed onto a new term or locked in indefinitely, and manipulative online choice architecture¹. It also points to fake reviews, which it says have been allowed to run rife online because regulators have not been given the tools to deal with them effectively¹. On regulated sectors, it notes that Ofcom introduced rules in 2020 that mandated mobile and broadband providers to notify their customers in advance when their contracts were coming to an end¹. It refers to CMA market investigations, including Energy (2016), Retail Banking (2017) and Funerals (2020), which found low levels of consumer engagement, barriers to switching or poor availability of information leading to adverse effects on competition¹.

The report also argues that reforming consumer protections would level the playing field for smaller businesses competing with larger ones, and that a fairer economy would encourage investment¹. It says the arguments are not new, citing the Office of Fair Trading in 2009 and William Kovacic in 2007 on the relationship between consumer protection and competition policy¹.

Why it matters for households

The report is a policy document from Which?, not a change in the rules, so no consumer rights, redress routes or firm obligations change on its publication¹. The households it describes are those facing practices it says make comparing or leaving a contract harder, such as automatic renewal onto a new term or difficulty cancelling, and those affected by misleading information or fake reviews online¹. It also frames the issue in terms of income: it says weak productivity growth since 2007 has held down real household disposable incomes, and that poor income growth over 15 years means the cost of living crisis is biting harder¹. The three measures it calls for would, if implemented, affect how consumer rules apply online, what the CMA can do about non-compliance, and how easily consumers can use alternative dispute resolution¹. Which? is one of the organisations that speaks for consumers in UK policy debates, alongside bodies such as the Consumer Panel and Citizens Advice, covered in our guide to who speaks for consumers¹.

What happens next

The report does not set out a timetable for the reforms it calls for, and no government response or legislative date is given in it¹. It is addressed to "the new government" and urges it to make reform of consumer protections a priority¹. No further steps have been reported.