Everyone needs good advice, whoever you are.

New automatic payments for delays in switching “should give people more confidence to shop around”, says Citizens Advice

Citizens Advice, in its role as the official consumer watchdog for energy, has responded to Ofgem’s announcement of new automatic compensation for customers who have problems switching their energy supplier.

Dame Gillian Guy, Chief Executive of Citizens Advice, said:

“These new protections should give more people the confidence to shop around and find the best deals. 

“Households can still save hundreds of pounds by switching and shouldn’t be put through the hassle and stress of having to claim compensation when energy suppliers make mistakes.”

Background: 

Citizens Advice published its Automation for the Nation report, calling for automatic compensation for essential service failures (including energy switching) in December 2018.

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Ending the benefits freeze won’t stop families facing the choice between heating and eating

MPs are today (10/02/2020) set to end the benefits freeze by agreeing to increase income-related benefits by inflation. 

While a welcome move, new analysis by Citizens Advice shows that almost 4 in 10 households that seek debt advice and receive these frozen benefits would still not have enough money to cover their costs by 2024 - even if these rises were to continue in future years. 

Citizens Advice has helped people such as Sheila, 64, who works part time and receives Universal Credit. Her payments can change on a monthly basis, making it hard for her to budget and cover her monthly costs. She is trapped in council tax and rent arrears, and has had to resort to a foodbank.  

She said: “Quite often I don't have any electric, so I'm very cold. I can’t even make a hot water bottle to keep warm, or make a hot drink. I have to stay under the duvet. 

“Even in the months when I am paid my full Universal Credit and wages it's still really hard to afford everything, including food.

“It's all swings and roundabouts, I just don't have enough money coming in to pay the council tax and rent arrears, the actual council tax, buy food and top up my gas and electric.”

The analysis from Citizens Advice found that the number of people who are unable to cover their living costs has increased since the benefits freeze began in 2016. In the first five months of the current financial year, 40% of the people the charity helped with debt who claim income-related benefits didn't have enough money to cover their living costs - an increase of 25% since the freeze came into effect.  

Citizens Advice is continuing to call for the government to help address this problem by increasing income-related benefits by the Consumer Prices Index (CPI) plus 2% for four years, and to recalculate Local Housing Allowance, which determines housing benefit for private tenants. This will help provide families with financial security and protect people from further hardship.  


It also argues that changes to benefit levels need to be accompanied by wider reforms to ensure the benefits system as a whole provides people with the right support. This includes ensuring Universal Credit gives people enough to live on by reviewing areas such as the amount of money retained by working claimants, and deductions for those dealing with debts or repaying advance payments. 

Dame Gillian Guy, Chief Executive of Citizens Advice, said:

“Our evidence shows that increasing numbers of people simply don’t have enough money to make ends meet. While a step in the right direction, increasing benefits by inflation will not go far enough to help solve this problem.

“The benefits system was created to support people in times of need. The government should show it's serious about meeting this ambition by properly investing in working-age benefits, and making sure fewer families are left in a downward spiral with no way to pay their bills.”

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Citizens Advice prepares for the busiest time of the year for debt advice

The last week of January is the busiest time for debt advice at Citizens Advice. Analysis of last year’s data revealed that on a single day, 29 January 2019, Citizens Advice offices helped 2,776 people with a debt problem- 24% above the daily average. 

In 2017 and 2018, the busiest day for debt advice fell on 31 January, with 2,762 and 2,775 clients seeking help on this issue respectively. 

This means over the past three years someone sought help from Citizens Advice every 10 seconds on our busiest days for debt advice. 

Household debts remain the most common issues for people coming to Citizens Advice for debt advice. In 2019:

  • 88,405 people sought help with council tax arrears 

  • 86,210 people came to us for advice on debts related to utilities including fuel, water, phone and broadband costs

  • 72,358 had problems with rent arrears.

Dame Gillian Guy, Chief Executive of Citizens Advice, said:

“There is typically a surge in demand for our debt advice towards the second half of January. 

“Many of the people who come to us have fallen into debt because they can’t meet the cost of essential bills. Utility bills, rent arrears and debts owed on council tax are key reasons people seek our help.

"Citizens Advice can offer free and independent advice and support to help you deal with your debts and get back on your feet.”

To help people kick off 2020 on a stronger financial footing, Citizens Advice is sharing its six top tips to help people get their finances in order for the new year.

Citizens Advice’s six top tips to sort out your debts.

  1. Work out how much you owe - Make a list of whom you owe money to and add up how much you need to pay each month. If you don’t have your most recent statements, contact your creditor to find out what you owe. 

  2. Prioritise your debts - Your rent or mortgage, energy and council tax are called priority debts as there can be serious consequences if you don’t pay them. These should always be paid first. Separate these and work out how much you owe.

  3. Work out how much you can pay - Create a budget by adding up your essential living costs, such as food and housing, and taking these away from your income. Any money you have spare can be put towards your debts. The Citizens Advice budgeting tool can help.

  4. Paying urgent debts - You might have to contact priority creditors quickly in urgent situations, like if you are about to be evicted. Tell them you're seeking debt advice so you can find a way forward. You could try to pay them something if you can afford to.

  5. Paying non-urgent debts - If you have any money left after paying priority debts, consider getting a free debt-management plan. You’ll make one monthly payment to the plan provider, who will handle paying your creditors. Or contact your creditors and offer them what you can afford to pay.

  6. If you can’t pay your debts - If you’ve got little or no money spare to pay your priority debts seek advice from us straight away.

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Citizens Advice response to CMA announcement of 6 month extension

Today the Competition and Markets Authority (CMA) has announced an extended deadline of six months to ensure regulators take effective action tackling the loyalty penalty.

The CMA has previously been clear that it wanted to see urgent action, and Ofcom and the Financial Conduct Authority (FCA) agreed to update on their progress within 12 months. While some progress has been made, Citizens Advice supports the CMA’s decision to extend the deadline. Regulators must use this time to tackle the loyalty penalty once and for all.

Dame Gillian Guy, Chief Executive of Citizens Advice, said:

“The loyalty penalty is a huge problem, and too often affects those who can least afford it. The government and regulators have promised action, but today's update shows that progress has been slow and inconsistent.

“Ofcom and the FCA have begun to make some progress, but both must make sure all providers stamp out the loyalty penalty. 

“The six-month extension granted by the CMA gives regulators extra time to tackle this practice. But, if real change isn’t achieved in the coming months, we’ll be looking to government to take strong action where regulators have not or cannot.”

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BACKGROUND:

Citizens Advice submitted a super complaint on the loyalty penalty - in the mobile, broadband, home insurance, mortgages and savings markets - to the CMA in September 2018 calling for it to consider how the problem can be fixed. The CMA’s response to the super complaint, the following December, said it agreed and had found damaging practices by firms which exploit unsuspecting customers. The CMA said it wanted to see urgent action.


Research in 2018 by Citizens Advice found that across five essential markets (mobile, broadband, home insurance, mortgages and savings): 

  • British consumers lose around £4 billion a year to the loyalty penalty (or £11 million a day).

  • Eight in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.

This is the fourth super complaint Citizens Advice has made since being given the power in 2002. Its super-complaint on payment protection insurance (PPI) in 2005 helped to generate a huge win for consumers, with at least £36 billion returned to customers in refunds and compensation so far.

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