GoCompare comments on Citizens Advice call for ‘loyalty penalty’ legislation
Citizens Advice has called on regulators to set targets to reduce the number of people who pay the loyalty penalty, and investigate solutions for vulnerable customers. Georgie Frost, Consumer Advocate for GoCompare, comments.
“Citizens Advice have highlighted what will be a familiar scenario for many households and a problem that is particularly widespread in insurance markets. There is no good reason at all why insurers should be able to offer a better deal to new customers than existing ones – other than; they are allowed to get away with it. Loyal customers see their premiums drift upwards each year and when they challenge their insurer, they can magically produce a better price – the one they keep for new customers!
“Efficient markets are based on there being a range of products to choose from and active customers selecting the best ones for their needs. However, we know that there are significant barriers to this happening in personal finance. Organised people are more likely to engage and switch, as are those with higher incomes. While those already in debt tend to avoid opening their bills at all. And people paying monthly (rather than annually) for products are up to 33% less likely to switch.
“However, it is hard envisage the Citizens Advice plan in practice. In effect you would be setting a quota for how many people could be allowed to stay on a bad deal? Nobody should be on a bad deal and regulation is best applied directly to stamping out the problem at source. For example; by banning the worst deals, increasing transparency and the quality of information available to consumers, outlawing bad practice in the industry and making it as easy as possible for people to switch to a better deal.”
GoCompare's own figures revealed that people who have never switched are a staggering £2bn a year worse off collectively - based on car insurance, home insurance and energy alone.*
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Notes to editors:
*Populus carried out the research on behalf of GoCompare. Populus interviewed a nationally representative sample of 5,000 online respondents aged 18+ in Great Britain between 16 and 21 May 2017
GoCompare is a comparison website that enables people to compare the costs and features of a wide variety of insurance policies, financial products and energy tariffs.
GoCompare does not charge people to use its services, and it does not accept advertising or sponsored listings, so all product comparisons are unbiased. Gocompare makes its money through fees paid by the providers of products that appear on its various comparison services when a customer buys through the site.
GoCompare does not sell its customers’ data.
When it launched in 2006, it was the first comparison site to focus on displaying policy details rather than just listing prices, with the aim of helping people to make better-informed decisions when buying their insurance. GoCompare has remained dedicated to helping people choose the most appropriate products rather than just the cheapest, and has teamed up with Defaqto, the independent financial researcher, to integrate additional policy information into a number of its insurance comparison services. This allows people to compare up to an extra 30 features of cover.
GoCompare is the only comparison website to be invited to join the British Insurance Brokers’ Association (BIBA) and is authorised and regulated by the Financial Conduct Authority (FCA).
For more information visit www.gocompare.com and www.gocomparegroup.com