New customers are able to take advantage of the best deals, while existing customers are offered deals which can mean they pay hundreds of pounds more per year.
The same is also true with insurance companies. Existing customers do not get the best prices offered to them at renewal time, and the best deals are offered to new customers.
The problem is exacerbated because price comparison websites for both energy rates and insurance premiums do not display tarrifs from a customer’s existing supplier, and so customers are unaware that a much better deal is available from their existing supplier.
Even if you phone the company who you currently have a contract with, you may not receive the most preferential price that a new customer would get.
The FCA is taking steps to encourage customers to shop around for better deals when their insurance policies are up for renewal, with new regulation due to come into force in April 2017. The big questions which remain are :
- Will regulators need to go further than this and prevent companies from giving their best deals to new customers only?
- Were Ofgem right when they decided that preferential pricing is a good thing for price competition?
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