RAC Heist

CashDog

A member of RAC for 30 years, along with my wife and, for some years, my daughter.

Received an email reminding me it was time to renew, at a rate of £573.99 for personal cover for myself & wife.

Contacted RAC to request a breakdown of costs to establish how this figure was arrived at. Call handler unable to offer anything apart from the price was in line with their policies and procedures; no costs available.

Found an email for Chief Exec to raise the issue, early response from Chief Exec representative confirming she would have to gather information from a number of different departments before calling back, promised to be within 2-3 working days.

No call back, but an email confirming they would get back to me by 1st Nov.

Nothing received by 1st Nov. (Cover due for renewal 3rd Nov). Email sent requesting progress on 1st Nov.

Email reply received same day – claiming that a breakdown of costs associated with the proposed cover was “business sensitive information and we are unable to itemise the cost”. Not only this, but also “The correct process was followed and the renewal quote was calculated correctly, in line with our pricing principles.”

If I call to arrange breakdown cover (with any supplier) I can request 

Different levels (vehicle/personal etc)

Home Start

Battery cover

Onward Travel

Tyre cover

Etc.,

Etc.,

Each item adds a corresponding charge, resulting in a figure per month/per year, as any reasonable person might expect….just like a myriad of purchases made across multiple organisations: a breakdown of costs.

Why does a renewal quote not carry the same fundamental components? How can a figure of £573.99 be determined? Is this a figure plucked out of thin air? It would seem that the RAC were attempting to obtain monies without any costings to support it…and all for a 30 year uninterrupted membership?

Result: RAC now offer an “Online equivalent” of £211.00. A reduction of £362.99, equivalent to 63%?

How can company representatives sleep at night having spent their day attempting to extort monies from their membership? Is this common practice across UK businesses? How many of these outlandish renewals are processed without question – the resulting vastly swollen income does not bear contemplation.

The battles for consumers grow by the day. MSE: Power to your elbows!

EssexExile

That's the way business works, charge as much as you can to make as much profit as you can. Being a consumer works the other way around - pay as little as you can to save as much as you can. Ain't capitalism great?

TadleyBaggie

I never give organisations that operate like this a second chance. When the highly inflated renewal price comes through, I find a better deal elsewhere. When I then contact them to refuse renewal and get the inevitable "Oh I'm sure we can can reduce the price", they are told they should have done that before.

FlorayG

TadleyBaggie said:

I never give organisations that operate like this a second chance. When the highly inflated renewal price comes through, I find a better deal elsewhere. When I then contact them to refuse renewal and get the inevitable "Oh I'm sure we can can reduce the price", they are told they should have done that before.

Same here with everything. When I didn't renew with the AA after more than ten years because they couldn't offer the cover I needed they called me and offered all sorts of extra perks plus a substantial reduction to try to get me to stay with them

Mildly_Miffed

Does it matter how they arrived at it?

Your choices are simple.

1. Pay it.

2. Don't pay it...
2a. ...then buy similar for less elsewhere.
2b. ...then don't buy similar at all.

Most people, on receiving that figure, would go straight to 2a.

Even the £211 figure is high, for the services available.

Johnmcl7

CashDog said:

How can company representatives sleep at night having spent their day attempting to extort monies from their membership? Is this common practice across UK businesses? How many of these outlandish renewals are processed without question – the resulting vastly swollen income does not bear contemplation.

I suspect they sleep pretty well knowing they're raking in decent amounts of cash for no effort.  I suspect a lot of people automatically renew and end up hugely overpaying otherwise this business wouldn't be so common place.  I find it frustrating given the company usually set the auto-renew as default and the renewal costs can be hugely increased unfairly.

Herzlos

Playing devils advocate, before automatic renewal, I wonder how many people called about a breakdown to find out they didn't have any cover and would need to join again at the roadside?

I know I essentially had to do that when I broke down and my bank account breakdown cover didn't cover it, and they stung me with a £50 roadside signup fee or something.

Having to call every year to negotiate the price down is a total pain though.

Stubod

..yep, a real pain. Have to do the same with the AA every year and they always manage to get the renewall price down well below what they originally quoted...

born_again

What is odd is 30 years a member & yet this is the 1st time it has happened?

Not sure why anyone needs a breakdown of the costs. It is what it is. Don't like it, then do the same as other MSE do. Move onto next breakdown co & cycle round them for the best deal & cashback.👍

LightFlare

They are either:

1) hoping you are stupid enough to pay their price
OR
2) hoping you are smart enough to realise that they no longer really want your business

Rosies_dad2

I'm wondering how widespread this is.    I've been an associate member of the RAC since the late 80's.  

Just a quick trigger warning here, I'm not natively of these parts, I will happily pay a 20% loyalty tax so I never have to think about this again.  

Under normal circumstances I would not even open the letter, but out of interest this year I did.  My renewal was £493.99, which I did think was a bit steep as it's usually £300 or so.  

So last year it was £366.99 (according to the RAC) and I wondered how the price could increase by 35% in one year, something like that would surely be newsworthy and I didn't remember hearing anything about it.

So I check and the RAC's list price for the level of cover is £204.80 (you get a significant discount for being a new customer, but as I pointed out before I don't expect that).  

So this morning I called the RAC and clarified the cost of Associate membership, and got the same price, and verified that there were no further charges.   I explained that I had had a renewal for nearly £500 and we both agreed that there must have been an error on the computer system and that a member of management would look into it and call me back.

Now obviously I don't expect to get a callback, I also don't believe there was an error on the computer system.   

I was intrigued by this, why would a company try to charge me nearly 3 times list price for a product?    So I started to do a little digging,    

The thing that is most interesting is that £71 of this is an "Arrangement and Administration fee"

Unlike the original posters request for a breakdown of the breakdown cover cost that resulted in a “business sensitive information and we are unable to itemise the cost”   As I understand it they have to explain what is covered by this cost because as a "fee" it must be commensurate with the service the fee is for.   

I found this somewhere else ..

I'm a product manager for a large UK insurer. Here are a couple of ways you can go at them if you want to.

Option 1:

Ask them if the £55 fee is commensurate with the cost of providing the service, and can they provide evidence of that. They will likely refuse to share it with you and say it's business sensitive information, so enter a formal complaint about it and say you think the fee is disproportionate. When they don't uphold this complaint, escalate to the FOS (Financial Ombudsman Service). They don't have to show you their policy fee register and cost analysis, but if the FOS ask to see it as part of the investigation and it doesn't show the fee being proportionate, they're !!!!!!.

Option 2:

You mentioned in another comment that you think the £55 admin fee only applies to renewing customers and you can get the same cover as a new customer without paying the fee. If this is accurate it is in direct breach of FCA PS21/5, aka GIPP aka "market study". The question around fees being used to replicate price walking came up in the original consultation and the FCA said this (in May of 2021):

Fees

Most intermediaries receive commission for distributing retail motor and home policies. However, some also charge the customer a separate arrangement fee. Such fees could be charged in addition to any commission the intermediary receives. We have not currently seen significant numbers of firms systematically increasing fees at renewal in the same way that premiums are being price walked; but, we are concerned that price walking through fees might become a more attractive option once the pricing remedy comes into force. Both fees and commissions are, ultimately, paid by the customer. From the customer’s perspective, it makes little difference if a price increase is caused by a higher fee or by higher commission. We are, therefore, making a change to the anti‑avoidance rules to make clear that firms will be breaching our rules where they charge a customer a higher fee at renewal than if they were a new customer. This will apply to both insurers and intermediaries, and to both current and closed books.

I'm interested as to others opinions.

I don't care about the money but I'm concerned ANYONE would think that a loyalty tax of 200% is OK.   It "Feels" like fraud (it obviously isn't as this is the RAC not some online scam) and that concerns me.

As I have already raised the issue with the RAC and they have promised to contact me back (even though  I know they won't) , I'm tempted to let them take the money on the 4th of March and then start the fight then.    Unless anyone has a better idea ?