Woman with hand on heart

When Loyalty Costs Us Dear

It feels safe to stick with what we know but a new report from Citizens Advice reveals our loyalty to energy and broadband suppliers can cost us a whacking £1,000 a year

There’s a school of thought that once we’ve found a brand we like, it saves us the effort of trying to find another. We know where we are. Like with a cosy pub, a shop whose clothes fit well or our favourite supermarket.

You’d think this applies to who we choose to supply gas or electricity. And that our loyalty counts. But that’s just what the big corporates want us to believe.

“I was staggered to see that Scottish Gas (British Gas) demanded £629 to renew my HomeCare 4 agreement which covers my boiler, central heating and plumbing,” one disgruntled customer wrote in to the Guardian newspaper. He dug around and found that as a new customer, the same cover would cost £384.

It doesn’t only apply to the insurance our suppliers sell us but the energy itself too. So many of us are caught in these legal scams that Citizens Advice has launched a campaign to end the ‘loyalty premium’ after finding the cost of staying put can be as much as £987 a year.

“Regulators need to take action to reduce the number of loyal customers who pay over the odds,” Gillian Guy, Chief Executive of Citizens Advice, said. “Companies routinely use tactics that take advantage of human behaviour.”

So, what’s wrong with how we behave as consumers? We asked Quids in! reader Rob why he does not shop around for better deals.
“It’s all a con,” Rob said, a little angrily. “You change companies and the prices go up anyway. You’re better off staying put.”

Experts generally agree this is a myth. Prices rise across the marketplace, (partly because big firms follow each other), and if a new supplier increases prices, chances are the old one did as well. Usually, we’re still better off if we switch.

Then we asked about using a switching service. “I won’t use a switching service,” said Rob. “All that happens is you end up on a list and get nuisance calls.” This suspicion is easy to understand. Gathering our personal details is big business for firms who sell them on to marketing companies but this should be about to change under a strict new law called the General Data Protection Regulation.

It seems that the fear of being ripped off by switching only leads to us being ripped off by the suppliers we already use. Corporate companies love us to be scared and just wanting a quiet life. Ever wondered why they often offer a discount for direct debits? Back to the Guardian reader’s story: “I had been paying [for my cover] by direct debit which made me a bit lax in checking the renewal quotes and as a result it must have slowly crept up.”

Sometimes the government steps in to protect us. When Centrica, owners of British Gas, recently announced 4,000 job losses, they blamed rules stopping them over-charging loyal customers. While it’s devastating for the workers affected, British Gas are kind of saying the caps will save consumers over 100 million pounds, (assuming each employee earned the UK
average salary).

It’s time to take matters into our own hands when it comes to these legal scams. As consumers, we should demand more respect for our loyalty and take control if we’re taken for granted. If the best deals are only on offer to new customers, let’s be new customers elsewhere.

Quids in! says
Set a diary reminder to check you’re still on the best deals on each anniversary of starting with a supplier. This is especially important if paying by direct debit, which is best if there’s a discount.
Compare your current prices to what new customers get or do one or two quick checks with other companies and ask your current supplier to match the best prices.
Try a comparison website but talk to Citizens Advice if you’re concerned about scams or not online.

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