Brussels, 21 October 2011
Making markets work for consumers. Questions and Answers on the 2011 Consumer Markets Scoreboard
I. THE SCOREBOARD
What is the Consumer Markets Scoreboard for?
The Consumer Markets Scoreboard is the European Commission's main tool for identifying potentially underperforming sectors in the single market from the consumers' perspective. The markets that appear to be underperforming are then analysed in depth in order to understand the problems better and to identify steps that can be taken to address them.
The ultimate aim of the consumer policy is to make sure that the EU single market is working for European consumers i.e. that it offers them a greater choice of products and services, ease of comparing offers, competitive prices and effective complaints handling.
How often is the Scoreboard published?
The Consumer Markets Scoreboard is published every autumn. It now covers 51 different markets in all EU countries, which are responsible for over 60% of the consumer budget (see IP/10/1369 for the 2010 Consumer Markets Scoreboard).
In the spring, the European Commission also publishes the Consumer Conditions Scoreboard, which has a different focus. It examines progress in the integration of the EU retail market from the consumers' perspective. It also monitors trends in national conditions for consumers, reflected e.g. in the effectiveness of resolving disputes and handling complaints, consumer trust in authorities, retailers, advertisers and consumer organisations, and the quality of consumer regulations (see IP/11/280 for the Consumer Conditions Scoreboard published in March 2011).
II. CONSUMER MARKETS 2011: KEY RESULTS
Which markets have turned out to be the most problematic?
Figure 1 below shows the main EU ranking of all 51 markets screened in the Scoreboard, in terms of their overall performance for consumers, broken down into services and goods markets. The lower the score, the more problematic for consumers a market is likely to be.
Figure 1. The main ranking of market performance (Market Performance Indicator): goods and services markets
As in 2010, services markets continue to underperform, with financial services and network services all below average.
Investments (including pensions and securities), real estate services and mortgage loans are the three lowest-performing consumer markets. In 2010, these were again investments (including pensions and securities), real estate and internet provision (see IP/10/1369).
Other service markets which are likely to be malfunctioning are: TV provision, train services, electricity services, internet provision, mobile phone services, current bank accounts, and consumer credit (“loans and credit cards”).
Goods markets on the whole appear to be working considerably better. Exceptions include second-hand cars and vehicle fuels, which have scored lowest among in the goods category (in 2010, these were second-hand cars, clothing and footwear, and meat; see IP/10/1369).
Compared with 2010, the electricity and fuels markets have deteriorated most, which may reflect consumer sentiment about electricity and fuel prices.
How did markets score on specific criteria?
Below are some of the key findings for the specific criteria used in the Scoreboard.
Ease of comparing goods and services
Overall, slightly more than half of consumers (54%) find it easy to compare goods and services, which is slightly more than in 2010 (52%).
The three lowest-scoring markets in terms of comparability are investments, (including pensions an securities), electricity services and water supply (in 2010, these were investments including pensions and securities, real estate services and legal services including accounting and notary services).
Compared with 2010, the markets in electricity services, water provision and train services have deteriorated most in terms of the ease of comparing offers.
The markets in "leisure goods”, "house & garden upkeep products" and "cafés, bars and restaurants" have seen the biggest improvements
Consumers' trust in retailers and providers
Consumers' trust in suppliers' compliance with consumer protection rules has seen a slight increase in 2011, with 45% of consumers rating it as “very good” (43% in 2010).
Nevertheless, more than half of consumers are not entirely confident in their suppliers.
In general, service providers are trusted less than goods retailers, which is linked to greater complexity
In 2011, the three lowest-scoring markets in terms of trust are second-hand cars, real estate services and mortgage loans (in 2010, these were investments including pensions and securities, second-hand cars and real-estate services).
Compared with 2010, the largest improvements in trust scores were registered for: "investments, pensions, securities", "non prescription medicines", "leisure goods", "clothing and footwear", "non-alcoholic beverages" and "house & garden upkeep products".
Experience of problems and consumer complaints
One consumer out of 10 experienced one or more problems with the markets surveyed, for which they thought they had a legitimate reason to complain (11% in 2010).
Compared with 2010, the largest increase in the percentage of consumers who experienced problems was in mobile telephone services.
The three markets that appear to be the most problematic in terms of the problems and complaints experienced by consumers are internet service provision, TV provision and mobile phone services (in 2010, these were internet service provision, railways and real estate services).
The "Investments, pensions, securities" market has improved most compared with 2010.
One in five consumers who experienced a problem did not complain – whether to the company, a complaint body, to a friend or family (the same result as in 2010).
In 2011, 58% of consumers were satisfied overall with the markets surveyed (57% in 2010).
Consumers were least satisfied overall with "investments, pensions, securities”, “mortgages” and “real estate services” (In 2010, these were "investments, pensions, securities", “real estate services" and "railways").
In 2011, "train services" was the market with the largest percentage of highly dissatisfied consumers (16% of "very poor" scores).
The “leisure goods” market registered the biggest improvement in its score.
Consumers are most satisfied with “books, magazines and newspapers”, “personal care services” and “glasses and lenses”.
Switching providers or tariffs
Only 9% of consumers actually switched supplier (10% in 2010) and 7% switched their service type or tariff while remaining with their current supplier (also 7% in 2010).
In terms of the perceived ease of switching, 47% of consumers consider switching to be easy while 15% of consider it to be difficult. This is slight improvement compared to 2010 (46% and 15% respectively)
When the perceived ease of switching as well as actual switching are taken into account in the market ranking, mortgages, investments including pensions and securities and electricity services score lowest of the 14 service markets for which this indicator was considered.
64% consumers are satisfied with the choice of goods or providers (across all markets).
This may suggest that choice is less of a problem for consumers than issues such as trust in traders and the ability to compare offers.
Choice is a new Scoreboard indicator introduced in 2011; therefore, comparisons with 2010 are not possible.
In general, prices of services show a wider divergence across EU countries than prices of goods, which reflects lower tradability of services.
Among goods, car prices show low divergence which can be explained by intense competition and the enhanced potential for cross-border trade.
III. METHODS USED TO EVALUATE MARKETS
How are the consumer markets evaluated?
The main ranking of markets used in the Scoreboard is based on the Market Performance Indicator (MPI) awarded to each of the 51 markets.
The MPI score is composed of four key elements:
the ease of comparing goods or services
consumers' trust in retailers / suppliers to comply with consumer protection rules
the experience of problems and the degree to which they have led to complaints
consumer satisfaction (the extent to which the market lives up to what consumers expect)
These four components have equal weight when calculating the MPI score.
The MPI scores are weighted by the population size of each country, which means that the views of consumers from larger EU countries have a proportionally greater influence on the results.
In addition, the Scoreboard also monitors the following aspects of consumer experience:
Switching suppliers and tariffs
Switching reflects competition as well as consumers' ability to exercise meaningful choice.
In certain markets, switching has a fundamental role in stimulating competition as it motivates providers to improve their efficiency and service in order to retain the loyalty of their customers.
Low levels of actual switching and a switching process which is perceived to be difficult can neutralise the benefits of liberalised markets for consumers.
For 14 markets where the data on supplier switching are available, the Scoreboard monitors the degree to which consumers are actually switching service providers or switching tariffs while staying with the same provider. It also tracks the perceived ease of switching for the 14 markets.
Choice of retailers or suppliers
This is a new indicator introduced in 2011. It monitors consumer perceptions of the competition available on each of the 51 markets covered by the Scoreboard.
Prices are a critical element for consumer decision-making.
In the single market, high price divergences for the same product can be a sign of market fragmentation.
Markets which are most likely to be a cause for concern are those where prices diverge considerably across the EU in a way which does not simply reflect the levels of purchasing power in each country.
The 2011 Scoreboard monitors price differences for over 100 goods and services.
What are the sources of data for the Scoreboard?
The main Scoreboard data used for the market ranking are supplied by a consumer markets survey carried out across all EU countries.
The survey was conducted with representative samples of consumers who had recent or ongoing purchase experience in each market, to ensure that the results reflect actual consumer experience rather than uninformed opinion.
Price data for comparable and representative goods and services across the EU was provided by Eurostat and other sources.
Member States supplied complaints data. The Commission is currently working with national complaint bodies on the implementation of the Complaints Recommendation which will enable future Scoreboard to include fully comparable complaints data across the EU.
IV. NEXT STEPS
What happens as a result of the Scoreboard?
The Scoreboard results provide clear indicators for where further work is needed at EU and national level in order to reveal the nature of problems and to suggest solutions. Some of the main follow-up actions are listed below:
The European Commission will launch two in-depth market studies based on the Scoreboard results (see below).
Together with Member States, the Commission will consider the Scoreboard data when deciding on the target markets for the future enforcement "sweep". Sweeps are co-ordinated EU-wide checks of specific markets by national consumer authorities, co-ordinated by the Commission (see IP/11/1094 for the latest sweep results and more details on this type of enforcement action).
Member States are encouraged to continue using the national rankings to launch initiatives at national level, to set national enforcement and consumer policy priorities. Good practices in this area already exist (see the full report for examples of how the Scoreboard data are used at national level).
The Commission has invited the EU business associations representing the sectors covered by the Scoreboard to a dialogue designed to create a better understanding of the problems specific to low-ranking markets. The discussion will also help identify and promote the best practices that explain the success of other markets.
What studies will be launched based on the 2011 Scoreboard findings?
The markets selected for these studies are consumer credit and fuels.
The purpose is to investigate in-depth the reasons behind the findings and to identify policy remedies. The Commission will collect comprehensive data about consumer experiences and opinions of the chosen markets, record actual consumer experiences of the market through "mystery shopping" and carry out a detailed price collection.
Why were consumer credit and fuels selected for in-depth market studies?
Consumer credit (“loans and credit cards”) scores poorly in the Scoreboard, particularly in terms of trust and comparability. As the Consumer Credit Directive comes up for review in 2013, the findings will provide rich evidence for assessing the impact of the current rules.
The fuels market ranks second-lowest among goods markets and has seen the largest deterioration since 2010. It is the fourth largest market in terms of its share in the household budget. Furthermore, the multitude of fuel designations can be confusing for consumers, with a possible impact on the single market.
What about the other problematic markets?
While a number of other markets have also ranked poorly, they were not considered for follow-up market studies for a number of reasons, which are summarised below.
Investments, pensions and securities
Studies in the area of retail financial services have been done recently (see below).
The mortgage sector is already the subject of a recent Commission proposal (see IP/11/383). Therefore, the new study will focus only on consumer credit.
Real estate services
While the Scoreboard shows that this clearly a problematic market, it accounts for a low proportion of the household budget and its cross-border dimension is also limited.
The problems experienced by consumers in the market of "TV provision" are similar to that of internet provision, and these services are sometimes bundled together. It is therefore important to wait for the results of the ongoing study on internet provision before deciding whether "TV provision" needs to be studied in-depth.
An analysis of the railways market is premature given that international passenger rail transport was only liberalised in December 2009.
A study has been done recently (see below)
Current bank accounts
A study has been done recently (see below)
The market for second-hand cars is strongly influenced by the developments in the new cars and vehicle repair markets. Concerning the latter, a new block exemption regulation for motor vehicles came into force on 1 June 2010. This new legislation should improve the conditions on the new cars and vehicle repairs market. For this reason, an in-depth study of the second-hand car market would be premature.
V. FOLLOW-UP TO EARLIER SCOREBOARD FINDINGS
What happened as a result of earlier Scoreboard findings?
The findings of earlier Scoreboard editions have triggered several in-depth market studies:
Studies on the meat market and the market of internet service provision are currently ongoing, based on the 2010 Scoreboard findings see IP/10/1369)
The retail electricity study, published in November 2010, showed that EU consumers could save € 13 billion in total by switching to the cheapest electricity provider. Nevertheless, very few consumers compare offers or switch (see IP/10/1507). The recommendations helping consumers make better choices were taken up in the European Council conclusions on energy policy for consumers and regulators are developing guidelines for price comparison and switching procedures. The study has also fed into the work of the EU-led Citizens’ Energy Forum, which brings together consumers, providers and regulators to work out practical solutions to consumer problems experienced on the energy market.
The 2009 study of e-commerce in the EU showed that the great potential for savings and increased choice goes unfulfilled as retailers refuse six in 10 cross-border online orders (see IP/09/1564 and MEMO/09/475). The forthcoming communication on e-commerce (to be accompanied by a market study on the potential for e-commerce) will outline EU actions to dismantle the barriers to online shoppers and traders in the single market.
A survey of consumer empowerment (2011) revealed startling facts about the skills and knowledge of EU consumers. For example, less than half of EU citizens are able to solve simple numerical problems that they would encounter in their role as consumers (see IP/11/455) The results support the need to overhaul regulation design to properly take consumer abilities into account; they also show the need for better information and education actions. These insights will feed into the new EU consumer policy agenda for the years to come.
A study on consumer behaviour in the retail investments sector, published in 2010, showed that less than only 1 in 50 consumers were able to select the right investments options. It also revealed that consumers rely strongly on advice despite potential conflicts of interest (see EXME 10/19.11) The findings are being taken forward integrated in the Commission's work on PRIPS (packaged retail investment products).
The bank fees study (2009) showed that opaque and complex tariffs are linked to higher current account prices (see IP/09/1341 and MEMO/09/402). The sector is currently working on improving the transparency of bank fees (see EXME 10/ 09.11).
VI. MORE INFORMATION
Consumer Markets Scoreboard
The full text of the Scoreboard, including detailed country-specific data:
Consumer Market Monitoring Dashboard
An interactive web tool providing detailed breakdowns on different aspects of the data
See also IP/11/1221