Do existing customers get a raw deal?

Published by Johanna Gornitzki on 08 May 2012.
Last updated on 08 May 2012

Businessman not listening

The majority of Brits believe banks, building societies and other financial services companies favour new customers over existing ones, according to Moneywise's latest Consumer Opinion Survey.

The poll, which forms the basis of our 2012 Customer Service Awards, asked more than 14,000 readers (thank you!) to nominate their most trusted financial service companies across a range of products - from current accounts to car insurance.

The results revealed a whopping 77% of respondents believe new customers are treated best.

Companies are "not interested in what old customers want, just new ones", said one respondent, "they are only interested in attracting new business. Shame on them!" said another. One dismayed respondent went as far as to say "they're fleecing existing customers".

Switching

While the sentiment is hardly surprising, what's interesting is that while customers seem to have cottoned onto this for some financial products, they don't with others.

Take car insurance. Some 86% of respondents to the Moneywise survey said they would shop around for a new policy each year, knowing full well the renewal quote from their current provider will likely be a lot more expensive.

But 65% said they'd had the same main savings account for more than three years. And more than one quarter (28%) had held the same savings account for more than 10 years. This is despite the fact that many deposit accounts include short-term bonuses, which typically expire after just 12 months, leaving savers with miserly rates thereafter.

For example, ING's top-paying instant access deposit account pays 3.1% but comes with a 2.56% bonus - so after a year, the interest rate drops to a measly 0.54%.

Exploitation

So why don't we shop around for all our financial products? Customer inertia certainly plays a part but financial services companies do everything they can to exploit this.

They advertise their great headline rates everywhere to lure in new business, while existing customers are left out in the cold. And should they decide to vote with their feet and leave, the switching process is often made to appear so onerous that they're beaten into submission. In short, existing customers are being shafted.

There are a couple of exceptions, of course. But these are few and far between.

Providers should focus on consistency and a fair deal for all their customers. But until this happens, save your loyalty for your nearest and dearest. It's a sad truth but when it comes to your finances, standing by your provider will cost you.

For more information about the best and worst trusted financial services providers, visit moneywise.co.uk/customerserviceawards/2012

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