Citizens Advice has today called for regulatory action, as new research reveals that customers who stay loyal to their essential service providers could be paying £987 more per year for the privilege. The chief executive of the charity, Gillian Guy, called it "unacceptable" for people to be "penalised for their loyalty".
They looked at six key markets – energy, mobile, broadband, home insurance, fixed rate mortgages and savings accounts – and found that charging loyal customers more than new customers is a common practice throughout. That's why they are calling on regulators to set targets to reduce the number of people who pay the 'loyalty penalty', and look into the impact on vulnerable customers specifically.
Aside from charging loyal customers more, the charity's research also found that providers are using 'unfair' tactics that deter consumers from finding a better deal, including confusing contracts, lack of notice when contracts end and financial barriers to ending a contract. The most susceptible groups are people aged 65 or over, people on low incomes and those without a university education.
"Companies routinely use tactics that take advantage of human behaviour, and regulators are letting them get away with it," said Gillian. "That's why regulators need to take action by setting targets to reduce the number of loyal customers who pay over the odds, and investigate solutions for vulnerable customers."
Providers shouldn't wait for regulatory action to appreciate their current customers more, as nine in 10 people think that essential services providers should charge loyal customers the same or less than new customers. Yet, this is unlikely to happen until the regulator steps in or people start to switch more often, thereby incentivising their providers to work harder to keep customers loyal.
If you're coming to the end of the fixed term on your mortgage, don't wait to see what your provider will offer you next; look around to find the best mortgage rates
Have you checked your current savings account recently? A better deal could be found elsewhere
While you're questioning your loyalties, why not see if you can benefit from a different bank account as well
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