Citizens Advice has launched a ‘super complaint’, highlighting that loyal customers are overpaying by £4.1bn a year on mobile, broadband, home insurance, mortgages and savings.
It found that on average loyal customers lose out on £877 a year in higher costs and less favourable interest rates. This figure includes the £48 a year they miss out on by being loyal to a savings account.
Older people are more likely to pay this penalty. They are 18% more likely to have the same savings account for four years, and a third of people over 65 are likely to have picked a savings account without shopping around (compared to one in four younger people).Those on lower incomes are also more vulnerable: they are 15% more likely to stick with an account for four years.
People are less likely to see the lower interest rates they receive over time as a cost of loyalty: 71% said they thought savings providers charged loyal customers the same or less than new customers.
And three in five people said they’d like to shop around more but they don’t have time.
Hargreaves Lansdown personal finance analyst Sarah Coles stated: “Savers are sticky creatures. The FCA has been trying to prize them away from old accounts for the past five years, forcing banks to provide better information on rates and making switching faster. But it admitted earlier this year that so far its efforts have been in vain.
"The super complaint provides useful extra pressure, but it’s difficult to see what the Competition and Markets Authority is going to come up with in the next 90 days that the FCA hasn’t managed to conjure up in five years.
"There is some hope, however, because two potential solutions are starting to emerge. The first is designed to make the process of unsticking savers less arduous, by making switching much easier. There are now a number of savings platforms that enable switching between accounts from different providers in a few clicks, so shopping around and switching can take a matter of minutes.The second solution is designed to protect those resolute and immoveable savers: the FCA is working on a safety net to protect those who don’t get round to switching. In July it proposed a basic savings rate. Savers would be offered introductory rates for a specific period, and after that expired, they would automatically be switched onto the BSR. Banks could set their own, but they’d have to offer the same one to all their customers."
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