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.

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

 

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!

How to take charge of your energy bills

So at last Ofgem has called a full investigation into the energy market.  (March 2014) Taken a new leader to do it. The Guardian has written a good article about the whys and wherefores of this investigation here.  Update – The result, June 2016 CMA publishes final energy market reforms.

For this post though I don’t want to debate the history, reasons and politics, I just want to show you the importance for, and ease with which, you can and should look at switching your supplier on a regular basis.

The consumer has to take some responsibility. I don’t mean for the hikes and the apparent huge profits that the big 6 make. I mean to be proactive and take a short time to look for a lower price. If more of us did this then perhaps there would be some more competition and less complacency in the energy market. For those of you who don’t just let your car or house insurance renew each year, it is the same principle. If you do just let your house and car insurance just renew let me tell you it is costing you hundreds of pounds a year. Never has a renewal been the cheapest quote for me in over 25 years of driving and only once for the house!

Why Switch?

Because you would be daft not to do so. If you haven’t switched for many years, chances are you are paying way over the odds for your energy. You’ll be on a standard tariff the most expensive you can have. The company you are currently with will have had other offers, fixed tariffs, promotions etc., and you have missed them all, to say nothing of the other companies.

I look to switch every year and think there was only one year when I didn’t change and that was a tariff where I was informed by the company if they could put me on a cheaper tariff. That offer was only on for a few weeks. The benefits of signing up to Martin Lewis’ website‘s emails, you get to know this stuff and make sure you are with everyone else who is first in the queue as often these deals are limited to the fist xx thousand.

Is It difficult?

Not really. Since 2010 energy companies have to send you an annual statement which will have all the information you need, i.e. consumption over the year. Even if you don’t have this you can still use the information from old bills. You can usually sign up to look at your account online, so you can also use that if you don’t keep your paper statements. Go to any of the switch sites, type into your favourite search engine “Switching energy” suppliers and take your pick. Always worth checking more than one. However, this is where the brilliant Money Saving Expert website is great again. Now, go to that link. That will take you painlessly through comparing prices. Name, address, postcode and consumption and away you go. Remember that just because your mate 200 miles away uses the same amount of energy as you, it does not follow that you should have the same energy supplier.

Then sign up for the email on that page. You can set a minimum for how much you want to save a year before switching and you will automatically get an email telling you that you  could save this amount and to look at switching. Excellent. So you can switch and forget about it. Some clever technological whatsit will continually check switching for you.

Then, use more than one switching site such as uSwitch which is probably the most used site. It also covers every other type of insurance. It also provides notification if you could save at anytime.

Can you make make further savings?

Sometimes. Remember paying by direct debit, same supplier for gas and electricity will also bring the price down.

Armed with the information from searching the switch sites through Martin’s site (although strictly speaking he sold it didn’t he?!) then look at cashback sites. The best is Topcashback* (Trust me I’ve been using cashback sites for years). Occasionally you can get some cashback but going through another switch site and getting the same offer and then also try direct as the supplier may offer a cashback after three months.

What if you have no Internet access?

Well you do have access, clearly! Of course you may know someone who doesn’t but I would hope that if you care that much you would look up on the Internet for them! (One can look at changing using other methods but they would annoy me I have to say but then I’m anti social.) More details here about how and when you can change your mind and what to expect from the company. (This is particularly relevant for a company you’ve invited into your home etc.)

What else do you need to know?

It takes flipping ages. Most commonly 6 – 8 weeks. So now is the perfect time to be looking to switch. (The companies may not be allowed to raise prices but there will be offers and if you haven’t switched recently you will more than likely be able to make a saving.) Remember switching in December isn’t the best time, by the time it has all gone through the most expensive part of the year has gone.

You may be on, or choose a fixed tariff which may have early exit fees. It is still possible that it will be cheaper to pay this fee and switch. I truly believe that very few companies and certainly none of the big 6, have consumers at their heart. They have profits! Therefore, trying to make it look attractive not to switch, taking 6 – 8 weeks to administer the switch and not informing us of better tariffs they provide are all ways of keeping our custom and prices high. Let’s hope the investigation brings some changes.

Also a cautionary note on the switch sites – make sure you check that you want to see all the deals. More information about his here on the Financial Times website.

Electricity pylon Everything you need to know to complain about energy problems

 

See All you need to know to make a complaint about energy for links to masses of information and stories about your rights and how to complain effectively.

 

 

 

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

 

For much more on complaining, asserting your consumer rights and template letters GET THE BOOK! How To Complain: The ESSENTIAL Consumer Guide to Getting REFUNDS, Redress and RESULTS!

 

 

 

*refer a friend link so I’ll get some pennies if you sign up as will you when you get welcomed!