Jeff Prestridge: it’s time our loyalty was rewarded not exploited

7 August 2019

I have never understood the financial services industry’s propensity to penalise us customers for our undivided  loyalty. Crazy. Bonkers. Illogical. You couldn’t make it up


Whether it’s our home or car insurance, our mortgage or our savings, it seems that the longer we stay with a provider, the more we are exploited. No reward for our loyalty – not a discount here, not a discount there. They just don’t give a hoot, do they? Profit, profit and more profit. Fixated, it appears, by the pursuit of new business.

I was recently reminded of this sorry state of financial affairs twice in the space of a couple of days. First was when chatting to a friend after we had taken part in a gloriously hot five kilometre Park Run in London’s Southwark Park (for those who are interested, these nationwide runs are a great and free way to get your weekend off to a flying start – have a mooch around the website,

Over tea and cakes – yes, I know, counter-productive after all the huffing and puffing – we got talking about her splendid cat called Pumpkin (pictured, top) who, despite reaching the ripe old age of 16, is more spritely than ever. Claws to die for and a right little mover when either treats are on offer or it’s diving under the settee in pursuit of a bit of peace and quiet.

The annual pet insurance for Pumpkin, said my friend, had just come up for renewal and the insurer had decided to up the ante. They wanted to ratchet up the premium by 100%. Not surprisingly, my friend – single and self-employed – was a little angered by this increase so decided to shop around for another policy by using a price comparison website. Sensible.

In doing so, she discovered that the same insurer was willing to offer her (Pumpkin) a policy as a ‘new’ customer for a little less than she had paid the year previously as a loyal customer. She signed on the dotted line – happy to accept a couple of minor policy exclusions along the way – and it seems the insurer is none the wiser that Pumpkin remains on its books, but now as a brand new customer. Crazy? Yes. Understandable from a business or customer point of view? Not in a month of sunny Sundays.

The second ‘sorry state’ moment was when a work colleague, Adrian, told me he had just upgraded his car from a Ford Focus to a VW Golf and so spoke to his insurer, RAC, about new motor insurance. He was told the premium would more than double.

To say Adrian was shell-shocked is an understatement. Indeed, he was so taken aback that the nice person at the RAC call centre took pity on him and said they would waive his £55 policy cancellation fee if he wanted to go elsewhere.

Like Pumpkin’s owner, he toddled off to a comparison website where, to his horror, he found that the best motor insurance available was from none other than the RAC. Not only that, but the premium offered was half what he had paid previously and a quarter of the price that the RAC wanted him to pay as a result of upgrading his wheels.

Using the new reference number given to him by RAC, he quickly booked the cover. The net result is that he has now saved £180 a year, compared to his old car’s premium, and a staggering £600 on the premium they wanted him to sign up to.

Adrian’s verdict? The system, he says, is “utterly useless, baffling and counter-intuitive”. And, he adds, you can only beat the ‘system’ if you are comfortable going online and know what you are doing. I couldn’t agree more. Not everyone is comfortable or computer-savvy or understands how to beat the system.

Although there is widespread agreement that loyal customers are being overcharged in all areas of their financial lives, no one in authority has yet to grab the issue by the proverbial horns and take decisive action.

A ‘super-complaint’ issued last year by those marvellous people at Citizens Advice, calling for an end to the ‘loyalty penalty’ that costs trusting consumers £4.1billion a year in extra premiums or costs, has so far been met with little more than a string of meaningless words.

Admittedly, communications regulator Ofcom has now made it easier for people to dump their mobile phone provider with a new ‘text-to-switch’ rule – an initiative that is expected to save phone users £10million a year as a result of not having to wait 30 days before being allowed to leave their current contract.

And, yes, the Government has said it will give regulators the power to fine companies that overcharge loyal customers – but please note the use of the word ‘will’ as opposed to ‘has’. Such powers may take some considerable time to be introduced and even longer to then be used.

But these are just small steps. It’s time for loyalty penalties to be banned across financial markets. It’s time for decisive action. So says Pumpkin. So says Adrian. So says me.