Loyal consumers could be wasting billions of pounds by sticking with the same financial services and household utilities providers year after year.
New research commissioned by Gocompare.com has found that nearly half (49%) of UK consumers didn’t switch any of the 10 most popular financial products in 2014, including car insurance, home insurance, energy provider, bank account and broadband.*
In fact over 1 in 5 (22%) admit to NEVER having switched their mortgage lender, bank, car insurer, home insurer, broadband provider, mobile phone or landline providers, energy provider, savings account or credit card – EVER!
59% of the 2011 UK adults who took part in the research felt that the worst effects of the Government’s ‘austerity’ measures were still to come and 55% were expecting 2015 to be a tough year financially. However, Gocompare.com found that millions of consumers could be saving £4.7 billion between them on just three common household expenses**.
- Drivers are missing out on £2.3 billion of savings on their car insurance***
- Householders are missing out on £1.7 billion of savings on their energy bills****
- Householders are missing out on £611 million of savings on their home insurance****
The most switched financial product is car insurance with 35% of drivers changing their insurer in the last 12 months. However, 34% have not switched in the last three years and half of those (17%) have never switched. Gocompare.com estimate that most customerscould save £234 by switching car insurer so those who have not switched in the last three years could be missing out on a collective saving of over £2.3billion.
Home insurance is another product which is easy to switch and 29% of consumers did just that in 2014. Gocompare.com estimate that most customerscould save £72.70 by switching their home insurance. However, 32% of householders have not switched their home insurer in the last 3 years including 21% who have never switched. Those customers could be missing out on a collective saving of £611 million.
Energy companies have been criticised in the past for not passing on the benefit of falling wholesale energy prices to customers. However, the price of short term fixed tariffs has dropped over the last year largely due to new, smaller providers bringing more competitive pricing to the market. As a result the top 10 tariffs are now all under £1000 a year for an average medium, dual fuel user. However, Gocompare.com has found that just 18% of consumers switched their energy provider in 2014, potentially missing out on a saving of £215.00 a year. Researchers also found that 58% of householders have been with the same energy provider for four or more years and that 30% have never switched. Loyal energy customers could be missing out on a potential £1.7 billion saving on their energy bills.
Despite the current account seven day switching guarantee coming into force in September 2013, just 6% of consumers switched their bank accounts in 2014. Nearly half (49%) of consumers confessed to always having had the same bank account, whilst 81% have been with the same bank for 4 years or longer. With banks competing for customers with incentives such as joining bonuses and interest on balances there are some good financial reasons for considering switching your bank account. With the introduction of midata later this year, customers will be able to use their actual current account data to compare accounts in a more meaningful way, and see in real terms which current accounts are right for them. Midata will launch first on Gocompare.com, before any other comparison site, on April 1st 2015.
Lee Griffin, Gocompare.com’s insurance spokesman, said: “Loyal customers are throwing away billions of pounds of savings by sticking with the same financial services and household utility providers year after year. Consumers who don’t regularly ditch and switch uncompetitive products and services such as their car and home insurance, energy tariff, mobile phone and broadband deals are paying out hundreds of pounds a year more than they need to in household bills. Research has shown time and again that companies often reserve their best deals for new customers and those who believe that their loyalty will be rewarded may actually be subsidising savvy switchers who compare regularly and are prepared to vote with their feet if they can get a better deal elsewhere.
“There are considerable savings to be made, but the only way to be sure of getting the very best deal is to check it for yourself by comparing what’s on offer from the competition. If your insurer, bank or energy provider thinks you’ll be happy to stay and keep paying over the odds, they’ll be equally happy to let you.
“For some products, like bank accounts for example, it can sometimes be tricky to see how much better off you’ll be by switching as it can often come down to how you personally use it. Later this year a new service will enable customers to easily and accurately compare bank accounts based on their own usage and it will be interesting to see if this encourages more people to break-up with their banks after what is often a very long relationship.”
*On 17-18 December 2014, Vision Critical conducted an online survey among 2,011 randomly selected British adults who are Springboard UK panellists. The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.
**Nearly £4.6 billion claim based on savings of £2,386,800,000 (car insurance) + £610,680,000 (home insurance) £1,702,800,000 = £4,700,280,000 – 4.7 billion.
***Based on independent research by Consumer Intelligence during 1 September, 2014 to 30 September, 2014: 51% of consumers could achieve a saving of up to £233.87 with Gocompare.com car insurance based on a comparison of at least 40 companies.
According to the RAC report on motoring, as of 2013 there were 30m drivers in the UK. £2.4 billion is based on the 34% of consumers (10.2m) who have not switched car insurer in the last three years. 10.2m x £234 = £2,386,800,000 (rounded to £2.3bn).
****Based on Gocompare.com data - 51% of customers who provided their buildings and contents insurance renewal price saved up to £72.70 with Gocompare.com (01 Jul 2014 to 30 Sep 2014).
According to the ONS there were 26.4m households in the UK in 2013. £615 million is based on the 32% (8.4m) households which have not switched home insurer in the last three years. Saving of £72.70 X £8.4m = £610,680,000 (rounded to £611 million).
*****Based on customers who provided their energy usage and received a price for switching energy supplier for both gas and electricity (dual fuel) using Energy Helpline powered by Gocompare.com during 01 July – 30 September 2014, at least 51% of customers saved £215 or more.