The Money Charity calls on the FCA to ban ‘inertia’ pricing and the loyalty surcharge.
In our response to the FCA’s discussion paper on fair pricing in financial services, we have called on the FCA to introduce rules that protect long-term ‘inactive’ customers from unfair price increases. As in the energy market, raising prices for loyal customers has become widespread in financial services, particularly in home insurance, where the price for a long term ‘inactive’ customer can be several times the price offered to active switchers.
We have called on the FCA to take a principles-based approach to the issue of fairness, learning from philosophy, psychology and empirical economics.
“There is much empirical evidence as to what people find to be fair and unfair in pricing,” The Money Charity said today. “Consumers want to be treated the same as others in similar circumstances and they want a fair, reciprocal relationship with their service providers. They expect loyalty to be rewarded and their trust to be reciprocated, not abused.”
“For these reasons, raising prices to take advantage of inertia, loyalty and vulnerability should be banned. We welcome the FCA’s enquiry into this issue, which is timely and reflects rising public concern and political debate about unfair pricing. A market in which competition reflects product quality and efficiency, and in which loyalty is rewarded, will be a healthier market for both providers and consumers.”
You can read our full consultation response here.