Author: Pulse Assent

The sites are being investigated due to concerns they are breaking consumer law by hitting customers with hidden charges and unexpected fees, such as for fuel, or late night pick-ups and drop-offs.

Over the last year the Competition and Markets Authority (CMA) has been working with car hire comparison sites to ensure their customers get clear and accurate prices.

As a result of this, there has been a significant improvement in the accuracy and clarity of information on car rental price comparison websites and, today, standards are much higher across much of the sector. For example, most comparison websites now clearly flag young driver surcharges and one-way fees in the prices they quote.

However, a small number of businesses have been identified which may have still not made adequate improvements.

This has resulted in the launch of 2 enforcement cases and prompted the CMA to publish advice to the sector on how to comply with consumer law, issuing letters to 40 companies, asking them to maintain standards and, where necessary, make improvements to comply with the law.

The advice makes clear the CMA’s expectations, such as:

• including all extra charges in the price they first give their customers;
• clearly setting out fuel pricing policies to customers; and
• warning them about high excess or deposits amounts.

Today’s announcement builds on the CMA’s work with the European Commission into ‘the big 5’ car rental firms in 2015, which resulted in savings of an estimated £100 million for UK customers.

It also follows the CMA’s year-long in-depth examination of online comparison tools, which set out clear ground rules for all sites. They should be:

• Clear on key issues such as how they make their money;
• Accurate in the information they provide;
• Responsible about how they use people’s personal data; and
• Easy to use.

James MacBeth, Project Director, said:

For many people hiring a car is an essential component to days out, holidays and trips. No one should be misled or face unexpected charges, whether they choose to book directly with the car hire company or through a comparison site.

While we have seen improvements in the way car hire comparison sites quote prices, we are still concerned that some companies may not have faced up to their legal obligations, and as a result we have opened 2 enforcement cases.

We expect this sector to provide clearer information about the true costs, and to explain upfront what customers will actually pay. Businesses must read our advice and make the necessary changes. If companies break the law they risk enforcement action, as these cases show.

People thinking about renting a car overseas should look at our advice and the Citizens Advice top tips to help you avoid being caught out when renting a car.

Notes to editors

1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For CMA updates, follow us on Twitter @CMAgovuk, Facebook, Flickr and LinkedIn.
2. The key pieces of consumer protection legislation relevant to the CMA’s investigation are the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and Part 2 of the Consumer Rights Act 2015. The CPRs contain a general prohibition against unfair commercial practices and specific prohibitions against misleading actions, misleading omissions and aggressive commercial practices. Part 2 of the Consumer Rights Act aims to protect consumers against unfair contract terms and notices, and requires contract terms to be fair and transparent.
3. The CMA has not reached a final view on whether the practices it is concerned about breach consumer protection law, and will listen to the companies’ responses to its concerns. If necessary the CMA will take action through the courts to enforce that law under Part 8 of the Enterprise Act 2002. Ultimately, only a court can rule that a particular term or practice infringes the law.
4. The CMA will continue to take steps to encourage and maintain compliance with consumer law in this sector. This will include conducting a review in early 2018 with further enforcement cases if necessary. It is also gathering evidence on complaints about problems that people have experienced overseas (in particular those relating to charges for damage) in order to build on the work we have already done with overseas regulators to tackle problems experienced abroad.
5. Media enquiries to the CMA should be directed to press@cma.gsi.gov.uk or 020 3738 6798.

Low pay is endemic in the UK and there has been little progress in the number of people managing to escape from poorly paid jobs, a new report by the Social Mobility Commission reveals today (Thursday 19 October).

The ‘Great Escape?’ report, carried out by the Resolution Foundation, explores trends in low pay over recent decades and examines the factors linked to low pay and progression. It tracks individuals’ pay over 10 years and divides them into 3 groups:

• ‘stuck’ – those who are stuck in low pay every year
• ‘cyclers’ – those who move out of low pay at some point, but who have not consistently stayed above the low pay threshold by the end of the decade
• ‘escapers’ – those who earn above the low pay threshold in each of the last 3 years, suggesting they have remained in higher pay

The analysis finds that just 1 in 6 low-paid workers (17%) managed to permanently escape from low pay in the last decade. Meanwhile, a quarter of low-paid workers remained permanently stuck in low pay and nearly half (48%) fluctuated in and out of low pay over the course of the last 10 years.

The report finds that women are more likely to be low paid than men and are also far more likely to get stuck in low pay. It is particularly difficult for women in their early twenties to escape low pay, with the lack of good-quality, flexible work to fit alongside childcare responsibilities as the most likely barrier.

However, there has been some long-term progress for women. Excluding those who exit the data over the following decade, the proportion of women getting stuck has fallen from 48% in 1981 to 91 to 30% in 2006 to 2016. In contrast, the risk of long-term low pay has increased for men over the same period (from 20% to 25%). This is likely due to the increasing number of men working in low-paid, part-time work.

The report finds that nearly two-thirds (64%) of workers who are ‘stuck’ in low pay are working part time, while nearly three-quarters (71%) of people who escaped low pay were working full time.

Getting stuck in low pay carries a severe pay penalty. On average, people stuck in the low pay trap have seen their hourly wages rise by just 40p in real terms over the last decade, compared to a £4.83 pay rise for those who have permanently escaped.

Age is also identified as a factor, with older workers far less likely to escape low pay than their younger counterparts. The report finds that 23% of low-paid workers aged 25 or under escaped low pay over the following decade, compared to 15% of those aged 46 to 55.

The research also finds that in the last decade, low-paid workers were mostly likely to escape in Scotland and least likely to escape in the North East.

It adds that while the National Living Wage is reducing the number of people in low-paid work – last year saw the biggest fall in 40 years – there will still be around 4 million low-paid workers in 2020, highlighting the scale of Britain’s low pay challenge.

The Rt Hon Alan Milburn, Chair of the Social Mobility Commission, said:

Britain has an endemic low pay problem. While record numbers of people are in employment, too many jobs are low skilled and low paid. Millions of workers – particularly women – are being trapped in low pay with little chance of escape. The consequences for social mobility are dire.

Britain’s flexible workforce gives us global economic advantage, but a 2-tier labour market is now exacting too high a social price. A new approach is needed to break the vicious cycle where low skills lead to low pay in low-quality jobs. Welfare policy should focus on moving people from low pay to living pay. Government should join forces with employers in a new national effort to improve progression and productivity at work. Without concerted action, Britain will become more socially divided and social mobility will continue to stall.

Conor D’Arcy, Senior Policy Analyst at the Resolution Foundation, said:

Britain has one of the highest proportions of low-paid work in the developed work. And while three-quarters of low-paid workers did manage to move into higher paying roles at some point over the past decade, the vast majority couldn’t sustain that progress. This lack of pay progress can have a huge scarring effect on people’s lifetime living standards.

The National Living Wage is playing a massive role in reducing low pay, but it can’t solve the problem alone. Employers need to improve career routes for staff, while government should support them with a welfare system that encourages progression at work.

Notes for editors

1. The Social Mobility Commission is an advisory, non-departmental public body established under the Life Chances Act 2010, as modified by the Welfare Reform and Work Act 2016. It has a duty to assess progress in improving social mobility in the United Kingdom and to promote social mobility in England. It currently consists of 4 commissioners and is supported by a small secretariat.
2. The commission board currently comprises:
   • Alan Milburn (chair)
   • Baroness Gillian Shephard (deputy chair)
   • Paul Gregg, Professor of Economic and Social Policy, University of Bath
   • David Johnston, Chief Executive of the Social Mobility Foundation
3. The functions of the commission include:
   • monitoring progress on improving social mobility
   • providing published advice to ministers on matters relating to social mobility
   • undertaking social mobility advocacy
4. Low pay is defined as hourly earnings below two-thirds of the median hourly wage, excluding tips, commissions or other payments. The low pay threshold is estimated to be £8.25 per hour in 2017.
5. The report draws on data and analysis from the Annual Survey of Hours and Earnings, the New Earnings Survey Panel Dataset and Understanding Society.