CAB launches super-complaint into penalising loyal customers

Citizen’s Advice Bureau

Citizen’s Advice Bureau has today launched a super-complaint with the Competition and Markets Authority (CMA). It is calling for the regulator to look into how consumers are being penalised for loyalty in 5 key sectors. It requests an outline from the CMA on how the problem can be fixed.

CAB’s press release said:

“Citizens Advice has revealed customers who stay loyal to their providers are losing out on over £4 billion a year.

The practice of overcharging loyal customers is widespread and Citizens Advice has repeatedly warned that loyal consumers are being ripped off.

Research by Citizens Advice found that across 5 essential markets (mobile, broadband, home insurance, mortgages and savings):

British consumers lose £4.1 billion a year to the loyalty penalty.

8 in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.

The loyalty penalty is, on average, £877 per year – equal to 3% of the average household’s total annual expenditure.”

ABI and BIBA

Back in May of this year, the ABI (Association of British Insurers) and BIBA (British Insurance Brokers’ Association) launched a set of Guiding Principles and Action Points  The ABI and BIBA has said it wants its insurance industry members to provide all the information about switching in their correspondence to customers.

Graeme Trudgill, Executive Director said “This guidance was a massive step forward in addressing any large discrepancies in premiums between new business and renewal and was put in place after the CA survey was done which informed their report.

In addition the FCA requirement to advise customers that have been with the same provider for several years that other providers are available – their ‘increasing transparency and renewal in general insurance markets’ – launched mid 2017 and may not have been reflected in the research.

“Though some customers may be able to obtain lower premiums it is important to en sure that the cover they have is suitable. Our members, insurance brokers most often do not set premiums and are able to help customers with the ‘shopping around ‘ at renewal. Since the launch of the principles and action points we’ve been highlighting to members the importance of double checking that customers who have been with the same insurer for a while are being offered a fair premium and we will continue to push this message hard with our members.”

The Financial Conduct Authority

The Financial Conduct Authority (FCA) has added its support. In a press release it stated:

“The FCA has been concerned about the issue of long-standing customers being charged more for some financial products than new customers for some time. This has informed our earlier work on cash savings and mortgages.

In the FCA’s 2018/2019 Business Plan we announced that we were looking at the pricing practices of general insurance firms. As part of that work we will launch a market study looking at how general insurance firms charge their customers for home and motor insurance. The terms of reference for this market study will be published in a few weeks’ time.”

Government

To coincide with the super-complaint The Department for Business, Energy and Industrial Strategy (BEIS) launched a review of Smart data to protect consumers from rip-off tariffs to look at how the use of technology, such as comparison tools and open banking, can support consumers. It will also cover the speeding up of creative and innovative approaches.

Consumer Minister Kelly Tolhurst said:

“Britain has long been a world leader in ensuring that markets work in the interests of consumers, but many loyal customers are still paying more than they need to.

The Smart Data Review will enable the development of new technologies to make it easier to access the best deals, and follows tough action we have taken in the energy market through our price cap which will protect over 11 million households from poor value default tariffs this winter.

It is our modern Industrial Strategy in action, ensuring markets provide consumers with keen prices and quality products and services through cutting-edge innovation.”

The Government has said it “… wants to ensure that all consumers can benefit from these types of innovative new services, not just those who are digitally savvy and regularly look to switch providers.” But if the review is to only look at technology, one wonders how.

In previous research, CAB found that it is the most vulnerable who are hit by these penalties. It’s exploitation of vulnerable consumers plain and simple.

Let’s hope things are moving in the right direction, and fast!

Help and resources

All you need to know about complaining to telecom providers

All you need to know to make a complaint about energy

How to save money on your car insurance

Top 20 tips for complaining effectively

If you don’t get satisfaction from customer services write to the CEO. You can find their contact details on the CEO email website. You are unlikely to get a personal response but it will escalate matters.

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For lots of help, advice, consumer laws and template letters for complaining about most issues in most sectors GET THE BOOK! How To Complain: The ESSENTIAL Consumer Guide to Getting REFUNDS, Redress and RESULTS!

All you need to know about the Package Travel and Linked Travel Arrangements 2018

The new Package Travel and Linked Travel Arrangements 2018 have replaced and considerably modified the former 1992 Package Travel, Package Holidays and Package Tour Regulations 1992. The new regulations came into force on 01 July 2018. Holidays taken prior to this will be covered by the previous regulations.

A package holiday definition

A package holiday is one that has at least two components, all as part of a ‘package’ for which you pay an inclusive price: transport (such as flights, transfers etc.) accommodation and/or another tourist service which makes up a significant proportion of the package. It must last more than 24 hours.

If you submitted one set of payment details with a total price and didn’t have to re-enter them and completed the transaction within 24 hours, this falls into the definition of a package.

The organiser (tour operator) is liable for the financial failures of hoteliers, suppliers and services within the terms of the contract.

Linked travel arrangements (LTA)

If you purchase a minimum of two different types of travel service from different providers this is not a package travel arrangement. However, if you buy two or more types of travel service together, put together by the travel organiser and you purchase both within a 24 hour period, this is a Linked Travel Arrangement.

For example, you buy a flight with a link to a hotel provided by a different company. If you buy an online flight and then have a link on the aircraft website to an accommodation website, where you purchase a hotel in a separate transaction.

The travel organiser must provide information to you in the same way as it does for a package. (See below).

An LTA does not give you the same protection that the package does. The organiser is not responsible for the service provided by the companies. However, it is responsible for providing financial protection for the refund when a travel service is not carried out due to insolvency. If it is responsible for the carriage of passengers – for example their airline flights – then it is also responsible for their repatriation.

Information

The Organiser must clearly state the details of the booking in a Standard Information Form, before you make any payment. The travel organiser also has to provide you strict details of the contract laid out in the Schedules to the Regulations, to accompany the confirmation invoice. This should include specifics of any arrangements, dates, times, costs, meals, excursions included/excluded, activities, transportation, cancellation fees, contact details for the package organiser, information on compulsory/voluntary insurance regarding repatriation in the event of illness/death/accident, and/or the cost of termination of the contract by the traveller. Interestingly, it must also inform the traveller about visa and passport requirements. See Foreign Office in epic fail on passport validity information.

Organiser makes changes

The Regulations state that an organiser must inform the traveller clearly and without undue delay. The organiser must provide the traveller with the option to terminate the contract without paying a termination fee if:

  • it has no choice but to significantly alter the main characteristics of the package

or

  • cannot fulfil any special requirements of the traveller which the organiser has previously accepted (paragraph 1 of Schedule 5)

or

  • increases the price by more than 8%

You should be given a reasonable length of time to respond to the above. If you do not, the organiser must send you further communication with a deadline. If you still do not respond the organiser will terminate the contract and refund all payments within 14 days.

Traveller chooses to terminate a package

At any time before your package starts, you can terminate the contract. However, you may have to pay the organiser an appropriate fee which they can justify. The fee will take into account costs that the organiser no longer has to pay to a third party. It should also take into account “alternative deployment” of travel services. This is where the organiser has been able to sell a part of the package to someone else. There may be cases where the organiser has not been able to do this and decisions would be made on case-by-case basis.

For example, it would be justifiable to not reimburse the price of an air travel ticket if the organiser cannot cancel or sell it on.

Reasonable termination fees based on the above and the length of time between cancellation and the start of the package must be specified in the contract.

If there are unavoidable and extraordinary circumstances at the destination (or in the immediate vicinity which would affect the travel to the destination) of your package travel contract, such as war, security risks etc. you can terminate the contract without paying a termination fee. You should be fully refunded within 14 days.

Redress

The consumer is entitled to redress for a variety of things dependent on what regulation has been broken and when.

Loss of value –  the difference between the cost paid for the holiday and the one received – e.g. the cost of a 4-star hotel which you paid for and the 2-star hotel to which you were moved.

Out-of-pocket expenses – incurred reasonable costs as a result of the breach of contract – e.g. having to pay for taxis when travel paid for was not provided.

Loss of enjoyment – compensation for the disappointment and distress caused by things going wrong – e.g. no children’s activities which were advertised.

Personal injury, compensation for any personal injury incurred abroad – e.g. medical bills, consequential loss etc, but specialist legal advice is thoroughly recommended for personal injury claims).

Package Travel and Linked Travel Arrangements 2018 on a sunsetFor more information, stories, laws and advice see All you need to know about booking/complaining about holidays/flights

book Logo cartoon cow at a laptop of book cover. How to Complain: The Essential Consumer Guide to Getting Refunds, Redress and Results!

 

and for lots more help, tips, guidance and templates All you need to know about booking/complaining about holidays/flights