Insurance Cares: Citizens Advice slams dual pricing
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The charity said that a CMA investigation should take place to prevent loyal vulnerable customers being charged more.
Charity Citizens Advice has warned that customer could be paying £987 more per year if they stay loyal to their provider.
The report found that dual pricing which sees loyal customers charged more than new customers for the same service is a common practice across six key markets including home insurance.
Gillian Guy, chief executive of Citizens Advice, said: “Companies routinely use tactics that take advantage of human behaviour - and regulators are letting them get away with it.
“That’s why regulators need to take action by setting targets to reduce the number of loyal customers who pay over the odds, and investigating solutions for vulnerable customers.”
Targets
Citizens Advice is calling on regulators to set targets to reduce the number of people who pay the loyalty penalty, and investigate solutions for vulnerable customers.
It is also calling on the Competition and Markets Authority to investigate the cross-cutting impact of the loyalty penalty, with a focus on vulnerable consumers.
Citizens Advice stated that it has found evidence across all six markets that providers use unfair tactics that take advantage of consumers’ behaviours and deter them from finding a better deal. This includes contracts with complex terms and conditions, lack of notice when a contract ends, and financial barriers to exit a contract.
According to the charity, the most susceptible group to pay a higher price for the same service because of their loyalty in all six markets analysed by Citizens Advice were people aged 65 and older.
Other affected groups included those people on low incomes or without a university education.
The remaining five markets that were singled out were: energy, mobile, broadband, fixed rate mortgages and savings accounts.
Insurance Age is running the Insurance Cares campaign which aims raise awareness within the insurance sector of the needs of vulnerable customers and work to improve outcomes.
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