Which? launches a campaign to Stop Sneaky Fees and Charges on financial products, as our new research reveals that two thirds of consumers who have paid a fee agree companies use the charges to trick people.
Almost half the population have paid a fee or charge on a financial product or service in the last year, and two thirds (68%) of them agree that companies use separate fees or charges to trick people into thinking that the cost of their product or service is lower than it is.
Two thirds (68%) also agree that companies make financial fees and charges more complicated than they need to be in order to confuse customers and only one in five people (19%) think fees and charges are representative of the costs that companies incur. Six in 10 (62%) people agree it is difficult to compare the total cost of financial products and services, as the fees and charges vary so much.
These findings are backed up by a separate Which? investigation into the car insurance market which finds that, overall, fees have been on the rise while premiums have been falling.
Nearly half of the 28 car insurance providers we looked at have increased administration or cancellation fees since our previous survey three years ago, increasing by as much as 200% in one case.
- Endsleigh’s cancellation charge has tripled to £75, a huge 200% increase, while Churchill and Privilege have doubled theirs.
- Six companies – Churchill, LV, More Than, Nationwide, Privilege and Saga – have increased fees to make changes to a policy by at least half, such as getting married, changing job or moving home.
- Eight companies have introduced new fees and charges, with the AA and Hastings Direct charging over £20 just to set up policies and Direct Line, NatWest, Privilege and Sainsbury’s now charging for duplicate documents if customers want to receive them in the post.
The Stop Sneaky Fees and Charges campaign is calling for all financial fees and charges, including on insurance policies, mortgages, bank accounts and credit cards, to be upfront, fair and for providers to make it easy to compare the overall price.
Which? executive director, Richard Lloyd said:
“Consumers are fed up with being hit with unexpected, additional costs for financial products that lead to them paying more than they bargained for. These fees can be hard to avoid, and people often don’t know what they’re really paying for.
“We want the financial services industry to Stop Sneaky Fees and Charges, and put an end to excessive, unclear and hard to compare fees that do nothing to improve the low level of trust in these markets.”
We’re calling on companies to take action immediately to end their customers’ frustrations with unclear, excessive fees that make the overall price difficult to compare.
We want companies to take action:
- Don’t hide the full cost from customers: Fees that are part of the total cost of a product should be prominently and clearly displayed.
- Stop making it hard to compare prices: It should be easy to work out the best deal, taking all fees and charges into account.
- Stop stinging customers with rip off additional charges: Extra compulsory fees after you’ve purchased a product should be cost-reflective.
We also want the Government and the regulator to conduct a review of financial fees and charges across the board to make sure that the price you see is always the price you pay.
You can sign up to our campaign here: www.which.co.uk/sneakyfees
Notes to editors:
1. By fees or charges on financial products and services we include fees or charges on insurance policies, mortgages, bank accounts, overdrafts and credit cards.
We are campaigning for action across five sectors:
Insurance administration fees: All fees associated with setting up, renewing or amending any type of insurance policy to be no more than the cost that companies incur.
Bank overdraft charges: All banks to commit to the Government’s Midata scheme so that consumers can compare the cost of bank fees and charges, and all banks to allow customers to opt-in and out of unauthorised overdrafts at no extra cost.
Credit card balance transfer deals: Credit card providers to stop advertising balance transfer deals as ‘0%’ when a balance transfer fee applies and instead prominently display the level of the fee.
Default fees: Missed or late payment fees of any kind to be set at a level that reflects the lenders’ administrative costs.
Mortgage set-up fees: All mortgage providers and price comparison sites to allow people to make meaningful comparisons between the total cost of different mortgage deals.
2. Methodology for consumer survey: Populus, on behalf of Which?, interviewed a representative sample of 2057 UK adults online between 16th and 17th July 2014. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules. Overall, 949 respondents had paid a fee or charge on the financial products we asked about in the last 12 months.
3. As part of our consumer survey we asked people who had paid an admin fee or charge on an insurance product in the last year to tell us about their experiences. They said:
- A quarter of those who paid an insurance policy admin fee said it was unexpected.
- Only one in three people who paid an insurance admin fee said the fees were clear before they took out the product.
- 52% of people who paid an insurance admin fee did not take into account the admin fees when comparing different products.
4. Methodology for car insurance investigation: In May 2014, we surveyed 40 car insurance providers on the cover of their standard comprehensive policies, including details of their administration fees and charges. The results were compared with a previous survey in May 2011. 28 providers had responded to both surveys.
5. The full article and table of results for our car insurance investigation is available on request.