BANKS should be forced to upgrade customers to better deals automatically, a City advisor says.
The call comes after it was revealed financial services firms make billions of pounds from their long-term clients paying more.
1 Upgrades proposed by panel chair Wanda Goldwag would mean people on poor deals are moved on to better products offered by the same providerCredit: PR Handout
The Financial Services Consumer Panel has now asked the Financial Conduct Authority to consider an automatic switch rule for the industry.
Panel chair Wanda Goldwag said: “Loyal customers are often those too busy to search for and switch to better products . . . or those who are not aware that better alternatives exist.”
The panel’s analysts looked at performance in eight products — current accounts, cash Isas, credit cards, mortgages, investment products, pensions, home insurance and income protection.
It found some customers were losing up to ten per cent of their annual income due to so-called “loyalty penalties”.
The upgrades suggested by the panel would mean people on poor deals — who are paying high costs and charges or receiving low returns — are moved on to better products offered by the same provider.
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Ms Goldwag said: “Consumers should not be penalised for loyalty. An automatic upgrade rule would level the playing field.”
The research follows a “super-complaint” made by Citizens Advice to the Competition and Markets Authority about long-term customers paying more for goods and services.
The CMA found a total loyalty penalty of around £4billion a year in markets including phone contracts, savings and mortgages.
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