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Compensation for consumers when things go wrong

In a competitive market, if companies don’t provide a good service, they will lose customers. But when that competition is lacking (such as in regulated markets), companies have weak incentives to avoid or mitigate problems, and the people affected by these problems have no guarantee of adequate compensation

In this report, we set out seven criteria that make a consumer problem a candidate for fixed compensation, and highlight where we see gaps in the current compensation regimes (as of June 2016).

We also recommend a framework for what regulators, government, or ombudsmen should bear in mind when they are setting levels of fixed or discretionary compensation. Finally, we make the case for fixed compensation to be provided automatically, ie without the consumer needing to claim.

We have used the thinking in this report to influence Ofcom's proposals to bring in fixed compensation for telecoms customers, to make the case for improved compensation rights in rail, and to press airlines to provide automatic compensation for flight delays.

See our full report:

Compensation for consumers when things go wrong 139 Kb