Loyal customers could be charged £1,000 more a year than new customers for essential services, a study has found.
Citizens Advice has called on regulators to take action after its study revealed that those who remain loyal to their suppliers could pay £987 more a year – the equivalent of four months’ worth of food for the average household.
It found that charging loyal customers more than new customers for the same service is common practice across the six key markets of energy, mobile, broadband, home insurance, fixed rate mortgages and savings accounts.
The advisory service said it had found evidence across all six markets that providers used “unfair tactics” to deter customers from finding a better deal.
These included contracts with complex terms and conditions, lack of notice when a contract ends and financial barriers to exit a contract.
An accompanying poll found that nine in 10 consumers believe suppliers should charge loyal customers the same or less than new customers.
The advisory service is calling on individual regulators to set targets to reduce the number of people who pay the loyalty “penalty”, and investigate solutions for vulnerable customers.
It also wants the Competition and Markets Authority to investigate how the issue affects the market as a whole.
The charity found the 65s and over group is the most susceptible to paying a higher price for their loyalty in all six markets, with others affected including those on low incomes or without a university education.
Citizens Advice chief executive Gillian Guy said: “It is unacceptable that consumers who stick with their existing provider of important services like energy and broadband are being penalised for their loyalty.
“Companies routinely use tactics that take advantage of human behaviour – and regulators are letting them get away with it.
“That’s why regulators need to take action by setting targets to reduce the number of loyal customers who pay over the odds, and investigating solutions for vulnerable customers.
“The upcoming consumer green paper is an opportunity for Government to show they are on the side of the consumer by protecting them from unfair practices that exploit their loyalty.”