Citizens Advice launches 'super complaint' over £4 billion loyalty penalty - MSE News

brewerdave

Insurance renewal is the most expensive "rip off" - home and car - the rate at which premiums are jacked up, is horrendous - I shop around every year and the savings are often £100s vs automatic renewal.
I'm actually paying less now for home insurance than I was in 1986 when I moved into this house!!

System

beardiedog wrote: »

Although not part of the Super Complaint, the energy companies still allow vulnerable people to remain on high SVT's so I think it is only right that they should be included in this discussion.

Slightly off topic but relevant. For many years, Ofgem insisted that suppliers had to offer one tariff that had no fixed term contractual conditions attached to it, and this tariff had to be used at the end of a fixed term contract if the consumer had not agreed to another fixed term contract or switched away. Why - because some suppliers were rolling consumers on to another fixed term contract with getting any approval to do so. As always, actions have consequences. There is always the risk that when the Gov intervenes to fix one problem that they unwittingly create another.

DragonQ

brewerdave wrote: »

Insurance renewal is the most expensive "rip off" - home and car - the rate at which premiums are jacked up, is horrendous - I shop around every year and the savings are often £100s vs automatic renewal.
I'm actually paying less now for home insurance than I was in 1986 when I moved into this house!!

Heh, I've been with the same car insurance provider for 3 years now. They always match the best quote I can find. Same with breakdown cover, although the renewal price is always slightly more than just apply online as a "new" customer, so I just do that instead.

rmg1

JuicyJesus wrote: »

Sorry, what? So, you don't pay attention to what you're paying and don't shop around, and it's the company's fault?

Well done, you've just insulted most of the elderly population (and other vulnerable groups) in one go.
Would you say that about my 91-year old neighbour with no internet and no knowledge of how to use it?

She's also just been diagnosed with cerebral dementia and the onset of Alzheimer's which makes life difficult.

Or perhaps you're talking about my 79-year-old grandfather-in-law? He's not good on the phone so I try my best to get him good deals but it still requires him to speak to people on the phone to confirm I can speak on his behalf.

Instead of insulting a lot of people in one go, why not get off your backside and actually help them????

VT82

pmduk wrote: »

Let's just call it what it is, there's no loyalty involved, just laziness.

I don't think it needs to be called 'laziness', because there are a number of examples given other than laziness why people don't shop around (anxiety, access to technology, mental capacity etc.).


However, I still think the words 'loyalty penalty' being used all over the place by Citizen's Advice is completely inappropriate, as if these customers are some kind of martyrs. In every type of company specified, you would be able to stay 'loyal' to your provider without remaining on their most expensive reversion rate. People who describe THEMSELVES as a 'loyal' customer being taken advantage of on standard variable tariffs are even more vomit-inducing. Something more neutral like 'inertia penalty' would be much more appropriate - neither disrespecting people who don't actively switch, nor praising them like 'loyalty' does. Of course that wouldn't make as many headlines!

The_Big_Bamboo

DragonQ wrote: »

Heh, I've been with the same car insurance provider for 3 years now. They always match the best quote I can find. Same with breakdown cover, although the renewal price is always slightly more than just apply online as a "new" customer, so I just do that instead.

...sounds like the company for me then!;...which company is it, pray tell?

CMA_Communications

Thank you Callum for starting this discussion.

My name's Gill and I work for the the Competition and Markets Authority - we are the organisation that has received the super-complaint from Citizens Advice (we have a duty to respond within 90 days). We're an independent public body that aims to make markets work well for people and ensure that companies follow the law.

As part of our work on the super-complaint, we are really interested to hear about people’s experiences with the ’loyalty penalty’, where they have been charged a higher price or got a worse deal than new customers, and found it difficult to negotiate a better deal or switch to a new supplier.

The Citizens’ Advice complaint has found that this type of practice is particularly common in contracts for mobile phones, broadband, home insurance, mortgages and savings, and we would like to know what you think about the issue. We’re also interested to hear what you think about this issue in other areas too. Do you enjoy shopping around and switching suppliers to get a new customer offer? Or do you think it’s a problem? If you have been charged a higher price than new customers, how did you find this out? What stopped you from switching or negotiating a better deal with your existing supplier, or what difficulties did you face when you tried to do so?

You can comment on this thread or let us know what you think by emailing us at [EMAIL="LoyaltyPenalty@cma.gov.uk"]LoyaltyPenalty@cma.gov.uk[/EMAIL]. We won’t be able to reply individually, but rest assured that your experiences will help inform our work. And you can keep in touch by following our super-complaint case page (https://www.gov.uk/cma-cases/loyalty-penalty-super-complaint) which we will keep updated with progress, and where we will publish our findings.

Many thanks!

Raxiel

Hengus wrote: »

'Horses and water' come to mind. Recently, I tried to help a neighbour get a cheaper energy deal. She doesn't have an internet connection or mobile phone and pays for everything in cash. Switching suppliers proved to be a step too far, so I provided her with details of her supplier's cheapest tariff and a telephone number to call. I even offered to listen in to the call. The issue for her is one of confidence - not laziness. Despite my best efforts, she is still on a SVT.

I have, though, had one success. When she wants to buy something she knocks on my door to see if it is cheaper on Amazon. If it is, she will let me order it for, and she pays me in cash! I am sure that there are 000s of people out there just like her.

Perhaps we're looking at it the wrong way then. They aren't paying a 'loyalty' (or laziness) penalty, its more of a 'convenience' fee. For some people, the extra cost of the SVT is an acceptable price to pay to avoid dealing with the issue of shopping around.

System

Raxiel wrote: »

Perhaps we're looking at it the wrong way then. They aren't paying a 'loyalty' (or laziness) penalty, its more of a 'convenience' fee. For some people, the extra cost of the SVT is an acceptable price to pay to avoid dealing with the issue of shopping around.

Getting back on topic, I am not sure that the CMA can do much about what is in truth ‘marketing’. I confess that I have never really understood why companies offer an introductory bonus that has the negative/counter effect of encouraging existing customers to move their accounts elsewhere. That said, I suspect that customer ‘stickiness’ offsets the cost of customer churn. It would be interesting to know what percentage of new customers actually stay with their chosen provider after the first year?

badmemory

I would suspect that if you are inclined to move, then you will always move. But if you are inclined to stay, then you will always stay until the company you are with does something which makes you rebel against staying. Staying with a provider is obviously easier & there is always the worry that the whole thing will go pear-shaped when changing. Out of the frying pan into the fire!