The end of the 'loyalty premium'?

[NickCQ]

Interesting action from the FCA this morning

"The FCA is proposing that when a customer renews their home or motor insurance policy, they pay no more than they would if they were new to their provider through the same sales channel. For example, if the customer bought the policy online, they would be charged the same price as a new customer buying online. Firms would be free to set new business prices, but they would be prevented from gradually increasing the renewal price to consumers over time (known as 'price walking') other than in line with changes in customers’ risk. For existing consumers, their renewal price would be no higher than the equivalent new business price."

https://www.fca.org.uk/news/press-releases/fca-set...

[croissant]

Long over due. Saying that my home insurance was up with Barclays and their renewal was cheaper than any new quote I was able to get.

I hope they apply the same rules to Virgin Media

[PrinceRupert]

The problem is that this will probably lead to price increases for the most engaged consumers. It is a similar problem as to 'sticky customers' in the energy industry i.e. suppliers compete for the most active customers (i.e. those that switch every year) and make up for it by overcharging customers who are less active (which are often vulnerable customers).

[Halitosis]

Great news - especially for the elderly and more vulnerable. Bloody infuriates me that my broadband/tv/phone provider charges me twice what a new customer pays

[CHARLESBERG]

croissant said:

I hope they apply the same rules to Virgin Media

Brilliant!

[Welshbeef]

PrinceRupert said:

The problem is that this will probably lead to price increases for the most engaged consumers. It is a similar problem as to 'sticky customers' in the energy industry i.e. suppliers compete for the most active customers (i.e. those that switch every year) and make up for it by overcharging customers who are less active (which are often vulnerable customers).

This exactly.

Overall people will see a small price decrease whereas those who shop around hard (like me) we will see notable price inflation.

I wonder can we the shrewd / price Davy look to see if multi year deals are possible and pay cash upfront (earns zilch in the bank anyway)

[GT03ROB]

Welshbeef said:

PrinceRupert said:

The problem is that this will probably lead to price increases for the most engaged consumers. It is a similar problem as to 'sticky customers' in the energy industry i.e. suppliers compete for the most active customers (i.e. those that switch every year) and make up for it by overcharging customers who are less active (which are often vulnerable customers).

This exactly.

Overall people will see a small price decrease whereas those who shop around hard (like me) we will see notable price inflation.

I wonder can we the shrewd / price Davy look to see if multi year deals are possible and pay cash upfront (earns zilch in the bank anyway)

The engaged customers will just have to work a bit harder for a better price.