For decades, a huge range of industries have made billions through a sneaky ‘open’ secret – the ‘loyalty charge’. This is where people who stick with the same service provider out of loyalty or convenience face increases in monthly or annual payments every time their agreement comes up for renewal.
In one of the most shocking examples Resolver has ever seen (and we’ve seen TONS of them), we spoke to a man whose elderly mother was paying just shy of £2,000 for home insurance. He found out and spoke to some of her neighbours, finding one with the same company who was paying just £300 for the same policy.
For years, businesses have acknowledged that this behaviour is unfair and promised to change their ways – but never have. However, in the last year, thanks to publicity in the media we reached a tipping point where the practice became so well known that people began to look at their own policies and get angry.
The Competitions and Markets Authority (CMA) investigated five industries (savings, mortgages, insurance, mobile and broadband service providers) and found that an astonishing £4 billion extra a year was being paid out by loyal customers, with more vulnerable people or those struggling financially likely to be stuck paying more.
Though this practice is finally being clamped down on, don’t expect changes overnight. Here are a few tips to help you tackle overcharging by businesses you’ve stayed loyal to.
If you think you’ve been overcharged, here’s what you do:
Most importantly, spread the word. Chances are you have a relative or friend who isn’t aware of the savings they could be making by shopping around. Have a chat and help them find a better deal or make a complaint. Starting 2019 with more cash in the bank is a good way to go on!