Consumers do make
buying decisions that they are happy with, according to the
researchers, but they are not necessarily making informed decisions
– meaning it is unlikely that that regulated information is having
a major impact on their behaviour.
For required information to have more impact, a new approach is
called for. One recommendation in the joint report published on
Wednesday by the Better Regulation Executive and National Consumer
Council is that information should be tested on consumers before
being applied to goods and services.
The information required on consumer credit agreements should
also be reviewed, it said.
The report gave the example of a store card agreement that took
more than an hour to read. Such agreements were felt by consumers
"to be full of dense, inaccessible small print, and were considered
to be there to protect the company rather than the consumer,
written in jargon and legalese," according to the researchers.
Consumers ignore the detail, especially when making spontaneous
decisions, for example, when being offered a store card at point of
sale. Low literacy groups said the small print was scary and
humiliating. Other groups were blasé about ignoring the contract
detail, describing it as unimportant and boring. When prompted for
their reaction to wording such as "The Consumer Credit Act 1974"
people "glazed over", according to the researchers. A
representative response: "What the hell is the Consumer Credit Act
1974 anyway?"
Such agreements should be shorter and rewritten in layman's
terms to be useful, according to the researchers. Symbols, diagrams
and colour can help, they found. They identified one example of
good practice in financial services, the Child
Trust Fund Decision Tree. The Child Trust Fund was set up by HM
Revenue and Customs and helps parents to select a savings and
investment account for their children.
Consumers were cynical about other regulatory information. They
believed that recycling logos were displayed to serve a marketing
purpose as much as anything else. Few consumers recognised the 17
recycling symbols they were shown. Product safety guidelines were
perceived to exist to protect the manufacturer against litigation.
The study highlighted a toaster that came with 50 safety warnings,
including warnings against using the toaster on its side and as a
source of heating. And messages to call centre customers that their
calls may be recorded were perceived as an implicit warning against
verbal abuse.
According to the report, "much regulated information is
ineffective because of its format, often complex black and white
text, and the way it is framed.
The report also suggests putting greater emphasis on the desired
outcome of the information while giving greater freedom to
businesses on the way it is provided.
Business Secretary John Hutton said: “We are all familiar with
times when the information provided with a product or a contract is
so lengthy or confusing we simply disregard it. This information is
expensive to provide, costing business over £1.5 billion a year and
simply confuses consumers. It is unacceptable that consumers are
taking decisions in the dark unaware of the potential dangers or
consequences."
"We are acting to give the power back to consumers to make
informed choices by rationalising information and making sure it is
presented as simply as possible," he said.
