From mis-selling and big bonuses to supporting the arms trade, we talk to disenchanted people who sought out an alternative
Barely a month goes by without another tale of a major UK company mis-selling to customers, dodging taxes, or generally behaving badly. Among the most notable, Barclays was fined £290m last summer as banks were caught rigging market rates and, earlier this month, energy giant SSE was slapped with a record-breaking £10.5m fine for mis-selling.
But is all this bad behaviour by corporations having any affect on customer behaviour? Apparently so. A steady stream of disillusioned consumers are seeking out better alternatives among the small providers who still know how to value their customers and deliver on their promises. We talk to five of them about their experiences.
Internet shopping
Screen printer Jane Foster, 43, makes toys, quilts and cushions using vintage fabric. When she started eight years ago she sourced fabrics on eBay and sold her wares through the site as well, but has since turned to Etsy.
Etsy is a site designed to showcase and sell a wide range of hand-crafted goods supplied directly by the maker. Originally started in the US by a craftsman, it now has followers in Britain and the rest of Europe.
“It gives me confidence buying on Etsy as you get background on the seller, see pictures of them in their studio and it makes you trust them more,” says Jane who lives in Totnes, Devon with her five-year-old daughter Polly and her partner Jim Palmer, 63.
“I bought a lot of vintage fabric on eBay before it got so huge. Now it’s often not accurately described or arrives stained and in poor condition. And I’ve struggled in the past to get a refund. eBay used to be quite cheap but now everyone is charging more.”
She also doesn’t shop on Amazon except when she’s looking to add to her collection of second-hand children’s books: “I like to help small, independent booksellers, but you do get bombarded by emails from Amazon.”
Banking
As a student at the University of Birmingham, Philippa Parry, 25, opened a bank account with NatWest.
She is doing a post-graduate degree in sustainable development run by a London charity, Forum for the Future. But it was when she was working in Barcelona for three years at a business school that she started to question the ethics of Britain’s big banks.
“There were so many examples of where they were not acting in people’s best interests with the banking crisis and bailouts. Why haven’t more heads rolled and why are they still getting big bonuses?” she says. “I was also concerned about what they were doing with my money, whether they were supporting the arms trade and not trading ethically.”
She looked at different options for an ethical bank on campaign site Move Your Money. She chose the Co-operative Bank when she moved back to the UK in August, a switch that went through smoothly.
“It’s a little difficult when I need to cash a cheque as the Co-op hasn’t got branches in my area,” says Philippa who lives in Amersham, Buckinghamshire. “But most of the time I do online banking. Customer service is always great, I don’t have to wait for ages and the people I speak to are always pleasant. But it’s more about ethics. That’s what bothers me.”
Energy
Sales account manager Kate Brooks, 37, has experience of two major energy providers – nPower and EDF – and felt she was always treated as though she was a nuisance whenever she contacted either.
“I was really fed up with their attitude,” says Kate who lives in a three-bedroom house in Polegate, East Sussex with her partner Fred Faust, 56, and their eight-month-old baby Oscar. “They always made me feel like I was in the wrong if I rang up, even if it was simply to provide my meter reading. The people on the end of the phone just seemed to be reading from a script and I was always put in a long queue before getting through.”
She looked around and found Ovo Energy, a smaller provider. Not only was it one of the cheapest in the market for her but she liked the way they presented themselves.
“Ovo came across as keen, open and honest, and I liked that they explained about how they invest in renewable energy,” she says. She applied to move through uSwitch and found the whole process very easy.
“I’ve been so impressed with them I’ve been telling other people about them including my Dad.”
Supermarkets
This time last year Joanne O’Connell made the decision to live for a year supermarket free. “I had ethical qualms about shopping in a supermarket, and it’s not even that cheap, so why bother?,” she says. Twelve months on and O’Connell – who you can follow on Twitter at @byesupermarkets and who wrote about her experiences online at guardian.co.uk/money/blog – is still supermarket free.
“When I started I wasn’t sure if I could manage for a fortnight, and when friends asked me how I’d celebrate the end of my challenge, I used to say ‘with a major blowout in Sainsbury’s',” she says.
“But what a difference a year makes. Swerving the supermarkets has forced me to change my approach to buying, growing and cooking food. I am spending less, but also eating better, healthier meals.”
To achieve her goal, O’Connell used the year to grow a lot of her own produce. She also took to foraging for food, such as nettles, and learnt to bake bread. For dried foods and other essentials she took to bulk buying from a wholesaler, which she says saved her around a third on supermarket prices.
Broadband
IT developer Onkar Pathre, 31, was disillusioned with Virgin Media when he moved a month ago to his new home in Crystal Palace in south-east London with his wife Priya, 29, a dentist.
He was part way through an 18-month contract with Virgin for broadband, TV and landline but, despite wanting to stay with Virgin, he was told he’d have to cancel his existing contract and start a new one.
There was a charge of £174 for discontinuing the service and he would have to pay £24.99 a month on his new 18-month contract. And the fee only covered broadband and phone because Virgin couldn’t provide TV in his area.
“I’d been with Virgin for more than three years but it wasn’t prepared to simply switch the service to my new address. A friend told me about Utility Warehouse,” he says.
“It doesn’t advertise, just relies on word of mouth. And it pays the termination charges if you switch to them. I don’t have to take out a contract for broadband, so I can leave at any time.”
It turns out Pathre was given the wrong advice by Virgin and he should have been able to move without paying the disconnection charge. However, he has no regrets.
His new deal works out cheaper – costing £14.99 a month for the landline and £3.99 for the first nine months, rising to £7.99, for 14MB broadband. “The customer service seems very good so far,” he says.
Posted by admin | Posted on 08-04-2013
Category : Business
Tags: blogposts, consumer affairs, enterprise, environment, ethical, fair trade, good, guardian, model, selling, social enterprise network, starbucks, start up & scale up
Social businesses must do more than simply convince consumers that they are ethical. Quality is essential, says David Floyd
As a model for social enterprise, the Fairtrade movement has a lot to answer for. I grew up in a Christian family and, although I’m no longer religious, I continue to recognise, with fondness and respect, many of the apparently bizarre but ultimately socially valuable things people to do as result of their faith.
Buying and, even more bizarrely, drinking some of the earlier brands of Fairtrade tea and coffee certainly fell into that category. Now those days have passed, it’s probably OK to admit that some of these drinks were a cocktail of unpleasantness – if I close my eyes, it’s still possible to recall the aftertaste 20 years on – and additional expense that, by any conventional logic, should have proved commercially lethal.
Instead, Fairtrade has proved to be a massive success because it’s a movement based on a good idea. The idea that customers who buy Fairtrade products know that, as a result of their purchase, the producers and workers who make Fairtrade products are paid a fair price and a premium on top of that to invest in social projects.
The idea was so good that, with the support of particularly socially committed early adopters, it generated enough momentum to give specialist Fairtrade manufacturers time to make their tea and coffee first relatively drinkable, then relatively affordable, until it eventually tasted really good and cost a similar amount to other brands.
Now many Fairtrade brands have progressed from the stall at the church coffee morning to the shelves of the major supermarkets, while many of their corporate rivals are now also producing their own Fairtrade products.
Unfortunately, many in the social enterprise movement observed the success of the Fairtrade brand and make some giant leaps of thinking that were superficially comforting but ultimately wrong.
A reasonable message to take from the Fairtrade experience is that, when choosing which specific product from a range of available brands, a small percentage of people give a very high priority to ethical considerations and a significantly bigger percentage may consider ethical factors if everything else – price, quality, availability – is more or less the same.
This is also suggested by the limited research available on the subject. For many social entrepreneurs, the message has been that there are millions of people who buy Fairtrade products, and therefore there are millions of people who’d really like to buy products from social enterprises if only they could find them.
At the other end of the social enterprise optimism spectrum, in a recent piece social entrepreneur Robert Ashton apparently questioned whether social enterprises could possibly compete with (increasingly socially aware) mainstream businesses at all.
Reflecting on Starbucks’ recent decision to boost its social impact, he noted that: “Starbucks ran a series of full-page press ads explaining their plan to contribute directly to one of the UK’s most pressing social problems: youth unemployment. They’re going to take on 1,000 new apprentices over the next two years.”
Ashton predicts that: “… 2013 will see social enterprises challenged by large corporates. Starbucks sells an awful lot of coffee, sandwiches and cake. A turnover of almost £400m per annum, and 8,500 employees, makes it easy to make a big difference with a very little effort.”
Ashton may be right in the sense that simply boasting of being social enterprise is not a strong basis for a rival company to compete directly with Starbucks on the basis of price, brand awareness and general ubiquity.
However, it doesn’t necessarily mean that a local, independent coffee shop – run on a social enterprise model – couldn’t use the fact that it was a social enterprise as an additional selling point, on top of offering good coffee and cakes and alternative to the major chains.
The point is that, for most customers, the social enterprise element would be a bonus and, at best, one consideration among many others. And that’s the situation for most social enterprises selling most goods and services to most customers.
As Matt Jarratt, director of social enterprise development at health and social care social enterprise, SCA Group, says: “In our experience customers, be they private purchasers or commissioners, buy our services because they offer the highest quality and best value for money. They like the impact we create as a social enterprise, but the legal model itself is of little interest to them.”
He adds: “As a social enterprise, it’s up to us to use our model well, but the end result must be that we offer the best commercial and social value possible, regardless of the ownership status of the business.”
Like any other business, a social enterprise has to make use of any advantages it has in order to convince customers to buy what it’s selling.
Depending on the situation, the fact that an organisation is a social enterprise may be a significant factor or entirely irrelevant to the choice a customer makes – but it’s never going to be the sole reason for their decision.
David Floyd is managing director of Social Spider CIC and blogs on Beanbags and Bullsh!t
This content is brought to you by Guardian Professional. To join the social enterprise network, click here.
Posted by admin | Posted on 06-04-2013
Category : Business
Tags: banking, compensation, consumer affairs, country, cyprus, deposit, features, malta, market, operate, state, world news
Malta throws a spotlight on how secure our bank accounts really are – or aren’t
Sharon Connor’s story, featured on our front page today, is one of the most heart-rending we have ever covered. Not only did she lose her husband tragically early, she has now also lost much of her life savings amid the Cypriot banking collapse.
Once again it throws the spotlight on how secure our bank accounts really are. Last week I wrote that AgriBank, a new player in the British savings market, is offering temptingly high interest rates, but is authorised in Malta, and therefore dependent on the Maltese €100,000 deposit protection scheme.
With memories still fresh of the Iceland debacle, when Icesave’s failure overwhelmed the country’s deposit protection scheme, I felt it worth a warning, especially given the fact that Malta, like Cyprus, has a super-sized financial sector.
I was wrong. The truth is that deposits in AgriBank are not protected whatsoever. What has emerged is that there is an alarming loophole in EU compensation arrangements, and reason to be seriously concerned about the EU’s so-called “single passport” for banking.
AgriBank, although it has no historic connections with Malta, has been granted a licence to operate as a bank by the Malta Financial Services Authority (MFSA) and, because Malta is in the EU, the bank is allowed to take deposits in any of the 26 other countries in the union.
This is one of the drawbacks to the EU’s neo-liberal drive for single markets, but profound inability to produce single regulators. We have the farcical set-up of a single banking market, but 27 different regulators all able to offer authorisation for a bank to operate across the entire union. Given the dog’s dinner that is RBS, maybe you think our regulators in London are no better than those in Bucharest or Bratislava, but I don’t quite buy it. The catastrophic collapses in Reykavik (though outside the EU) and Nicosia tell you otherwise.
But even more bizarre is the loophole that has opened up in Malta. It turns out I was right to assume that banks registered in an EU state have to become members of that state’s €100,000 protection scheme, as set out in the European Deposit Guarantee Scheme Directive.
But see if you can make head or tail of this. The MFSA emailed me to say: “We can confirm AgriBank is a member of the Malta Deposit Compensation Scheme (DCS).” Yet on AgriBank’s website it says
