Citizens Advice call to investigate 'cost of loyalty'

Customers who fail to switch their energy, broadband or insurance providers could be paying up to £1,000 extra a year, Citizens Advice warns.

The charity is calling for an investigation by the UK's competition watchdog into what it calls the extra price of "loyalty".

Customers who do not switch are often moved onto default tariffs.

The Competition and Markets Authority (CMA) said it was already looking at the impact on vulnerable people.

Using its previous studies into various sectors, the charity suggested that it was common for longstanding customers to be charged more than new customers.

Sectors affected included energy, mobile, broadband, home insurance, fixed-rate mortgages and cash Isa savings accounts.

The charity estimated that longstanding customers could be paying £987 more a year.

Many were customers aged over 65 and some were on low incomes who were unlikely or unable to switch, Citizens Advice said.

"Companies routinely use tactics that take advantage of human behaviour, and regulators are letting them get away with it," said Gillian Guy, chief executive of Citizens Advice.

"That is 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 people."

The energy regulator has already announced it will limit the tariff paid by some vulnerable people.

A CMA spokesperson said: "We share concerns about people being penalised for staying loyal to one provider, and we plan to consider this issue as part of our work to examine how markets affect vulnerable people.