You are here: Home - Household Bills - News -

‘Loyalty penalty’ costs Brits £1,000 a year

0
Written by:
01/02/2018
Loyalty doesn't pay and it can cost customers nearly £1,000 per year, according to research by Citizens Advice.

The consumer group called on the regulator to take action, as its research showed customers who stay loyal to their essential service providers could be paying £987 more per year. It wants consumer regulators to set targets for the number of people paying ‘the loyalty penalty’.

Companies routinely charge loyal customers more than new customers for the same service across six key markets: energy, mobile, broadband, home insurance, fixed rate mortgages and savings accounts.

This runs contrary to the public’s view, which shows that nine in 10 people believe they should be rewarded for loyalty, with loyal customers charged the same or less than new customers.

The group found evidence across all six markets that providers use unfair tactics, including finding ways to deter them from finding a better deal. This includes contracts with complex terms and conditions, lack of notice when a contract ends, and financial barriers to exit a contract.

Citizen’s Advice also called on the Competition and Markets Authority to investigate the cross-cutting impact of the loyalty penalty, with a focus on vulnerable consumers. It found that older customers are more likely to pay a higher price for the same service because of their loyalty.

Gillian Guy, chief executive of Citizens Advice, said: “It is unacceptable that consumers who stick with their existing provider of important services like energy and broadband are being penalised for their loyalty.

“Companies routinely use tactics that take advantage of human behaviour – and regulators are letting them get away with it. That’s why regulators need to take action by setting targets to reduce the number of loyal customers who pay over the odds, and investigating solutions for vulnerable customers.”

Guy said the upcoming Consumer Green Paper, announced by Philip Hammond in the March 2017 Budget, was an opportunity for government to show they are on the side of the consumer by protecting them from unfair practices that exploit their loyalty.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
House prices show surprise growth jump in January

House prices leapt in the first month of 2018, with short supply fuelling annual growth of 3.2%, from 2.6% in...

Close