UK consumers' banking loyalty costs up to £1,500 a year

05 June 2003
UK consumers could face losing up to £1,500 a year by failing to shop around for financial services, according to the Consumers' Association.

The report in Which? Magazine warns consumers not to automatically trust their bank to give them the best possible price on all its products, even if they are getting a good deal on, say, a mortgage or current account.

For example, the Consumers' Association warns, HSBC's mini cash ISA was a best buy, but the bank pays just 0.1 per cent interest to current account customers compared to an industry leading 3.04 per cent.

Which? noted that customers were bombarded with information about products, however none of the banks it looked at were found to offer consistently good value across nine everyday banking products.

Taking up all the offers could cost consumers hundreds of pounds a year, the article warns. If a customer bought all the products on offer they could be £1,502 a year worse off than if they had gone for the best buys.

Helen Parker editor of Which? Magazine commented, 'None of the banks can be relied upon to provide consistently good value. In fact, in some cases they are plain expensive.

'We would advise people to shop around for a good deal, and if you find yourself with an uncompetitive account, switch. It's easy to switch these products and, if you make the right choice, you could be a lot better off.'

Which? compared nine everyday financial products offered by these 11 companies with its Best Buys on equivalent products, covering savings, borrowing and insurance, plus current accounts.

Overall, the survey suggested that the most expensive financial services provider for consumers was Alliance & Leicester. Nationwide was the cheapest but the nine products on offer would still cost customers £700 more than the Best Buys.

Previous Which? research in the past year has shown that UK consumers could annually make around £5 billion by shopping around for the best savings accounts, £0.5 billion by moving to the current accounts with the best rates and £2 billion by switching to credit cards with lower rates.