Loyalty. In most relationships, loyalty is something to be celebrated. From childhood friendships, family bonds to romantic attachments, the ability to remain loyal is seen as a valuable attribute with long-term benefits.

New research from Confused.com has revealed the average relationship in the UK lasts 19.5 years1.

But are we as loyal as we once were? The research, which surveyed UK motorists who rent or own their own home, found that almost half (44%) of people think Brits are less loyal to their partners now than they were 20 years ago. And a quarter (25%) have actually admitted to cheating on a partner2.

While being faithful is widely considered to be a virtue, there is overwhelming evidence that suggests loyalty to the same brands could do more harm than good. Regulatory bodies have demonstrated those remaining loyal to products and brands are actually losing out, with the cost of bills being significantly higher than they are for new customers. Those who constantly switch providers, however, benefit from dramatically reduced monthly outgoings.

This cost imposed upon returning customers is what is more commonly referred to as the “Loyalty Penalty”. Essentially, it proves that being loyal doesn’t always pay.

It also suggests that consumers are confused and overwhelmed about how and when they should switch providers to save money. This confusion leads to consumers staying with the same service provider and being hit in the pocket.

So how brand-loyal are UK consumers? Recent research by Confused.com suggests that one in eight (12%) people mistakenly believe sticking with the same company is financially rewarding with customers sticking with the same supplier for four years, on average.

The Citizens Advice Bureau (CAB) regularly campaigns on behalf of individuals across the UK. In autumn 2018, it raised grave concerns that the “loyalty penalty” was unfair to customers. Worst of all, it disproportionately harms those already in financially vulnerable situations, particularly the elderly and households with lower education levels – many of whom were already in financial difficulty.

The super-complaint highlighted five ‘essential’ markets where the loyalty penalty was particularly prominent – cash savings, mortgages, home insurance, mobile phone contracts and broadband3.

According to the super-complaint put forward at the time, 80% of customers were being charged higher prices for remaining with their suppliers in at least one essential sector. This came only one year after the organisation found that three out of the four major mobile phone providers were charging long-standing customers an additional £22 for handset + data packages once their fixed term contracts had ended. For those with newer devices such as the iPhone 8, this jumped to £484.

Gillian Guy, Chief Executive of Citizens Advice said:

“It’s completely unacceptable that customers are still being ripped off for being loyal to the companies they rely on every single day.

“The loyalty penalty is clearly unfair”.

In October 2018, the Financial Conduct Authority (FCA) announced that it would investigate how home and car insurance policies are priced, after finding evidence of ‘hidden’ discrimination5.

Following the Citizens Advice super-complaint, the Competition Markets Authority (CMA) investigated concerns that companies were penalising consumers for their loyalty and charging existing customers higher prices than new customers6.

The CMA found that long-standing customers across the UK were being hit with a bill equating to a whopping £4.1 billion pounds a year - an average of £877 per person - in the five selected markets.

In December 2019, the CMA announced a package of reforms and recommendations to regulators (including the FCA) and government to help stop loyal consumers being ripped off.

Andrea Coscelli, Chief Executive of the CMA said:

“Our work has uncovered a range of problems that leave people feeling ripped off, let down and frustrated. They shouldn’t have to be constantly ‘on guard’, spending hours searching for or negotiating a good deal, to avoid being trapped into bad-value contracts or falling victim to stealth price rises.

“Millions of loyal or vulnerable customers are being taken advantage of each year by firms – and end up paying much more than they should do. This must come to an end.

“Together the CMA, regulators and government must act more promptly and powerfully to hold firms to account, stop them exploiting their customers and restore people’s trust in markets.”

Loyalty penalties are usually a concern in sectors where long-term contracts between customers and suppliers are commonplace. These contracts roll over or auto-renew, as is the case with car insurance and mobile phones. At the end of the contract, the company continues to supply the customer with goods and services at a new price unless the customer cancels.

In this situation, the traditional relationship between consumer and vendor has shifted in favour of the vendor. Traditionally when purchasing goods, both parties are dependent on one another.

Competition works through choice. People choose where to spend their money and the services they’d like to buy. In this way, competition keeps prices at a level that allows companies to make a profit but are still low enough that the customer feels they have a good enough deal to return again in the future.

However, with loyal customers, particularly those on contracts that auto-renew, the need to get customers to return is removed. As a result, you may buy something at a price you’re happy with, but a year down the line companies feel comfortable increasing that price so that you end up paying more.

By increasing charges on existing customers, companies are able to heavily discount shiny new deals to entice new customers, perpetuating the cycle.

On average, customers stay with their service providers for four years and two months. Over two thirds (67%) think they should be rewarded for their long-term commitment by reducing the contract or cost for each year of customer loyalty. Over half (55%) companies should reward customers if they haven’t claimed on an insurance policy. Yet, almost one in three (30%) respondents have never haggled with a service provider, despite the fact that 45% of customers who asked for a better deal were offered a discount or an incentive to stay.

And when looking at those who haggled, the research found that car insurers were the providers most likely to offer a monetary discount, compared to energy who were least likely to reduce the price.

What this shows is that there are certainly opportunities out there for consumers to save money when they try to get a better deal. But if you don’t ask you don’t get. Unfortunately, one in four (25%) have never attempted to haggle with their provider because they mistakenly thought they would not be able to get any money off.

Our research reveals that women are just as likely to cheat on their partner as men – with 26% of men admitting to cheating on a partner and 25% of women admitting so3.

But the research also suggests that women care more about being rewarded for their loyalty than men. Almost nine in 10 (87%) women are currently members of loyalty programmes compared to 73% of men. More women (40%) than men (32%) believe having a loyalty scheme will encourage them to return for more of the product or service3.

Unsurprisingly then, the research showed that women are more likely to shop around if they are not being rewarded for their loyalty.

1. The length of time male customers spend with a company is slightly higher than that of female customers across all utility sectors (home insurance, car insurance, broadband, mobile and energy), on average.

2. When it comes to car insurance, only 68% of men have ever used a price comparison website compared to 76% of women.

3. Only 42% of men believe that switching providers helps save money in comparison to 46% of women.

4. 29% of men believe their policies are fine if they don’t increase in price compared to 25% of women.

With the rise of social media, online dating and societal progressions, we can argue that the UK is becoming less precious about loyalty over time.

When asked what was considered as ‘cheating on a partner’, there was a clear divide between the younger and older generations³.

Interestingly, the younger generation were a lot more sensitive over actions considered to be cheating than the older generation. They seem to be more loyal with partners but less loyal with brands.

The research concluded:

1. The average 18-24-year-old spends 3 years and 1 month with a service provider in comparison to 4 years and 10 months years for those aged 55 and over. (+55%)

2. More than a third (34%) of those aged 25-34 shop around annually to seek out the cheapest deal, compared to only 50% of those 55 and over.

3. Worryingly, almost one in four (24%) of those aged 18-24 mistakenly believe that staying with a company for as long as possible is good for their credit rating, compared to 6% of those aged 55 and over. In actual fact it doesn’t make a difference.

On average, a consumer will stay with the same energy provider for four and a half years.

Energy is essential to our everyday lives. After housing costs, it’s one of the biggest chunks of our monthly budget so it’s always good to keep an eye out for a better deal.

While of course it’s possible to save money by switching off the odd light or two, this isn’t going to make much of a difference if you are on a terrible tariff.

The energy sector in particular penalises customers for their loyalty. They often offer tariffs on fixed-term contracts (for one year or two years) which at face value seem great.

However, if we look at the small print, the energy company has the right to increase their monthly cost by a certain percentage, provided they give customers fair notice of their intention to do so. As a result, those who remain loyal will see their prices creeping up year- on-year. However, new customer offers are often priced at a lower level.

Energy customers can also be hit if on a fixed term contract. Once this runs out, customers will find that their energy company transfers them across to the standard variable tariff. This is much more expensive month-on-month than other tariffs, offered by both the same company and by competitors.

Like the energy sector, broadband relies heavily on customers failing to leave once their contract with the supplier is finished. Broadband deals are often given for a fixed period of time and once this is complete, customers end up on a much higher monthly price.

In addition, the development of new technologies means there are a variety of broadband packages. However, newer technology is often more expensive to run. This is why some broadband companies will offer this as an incentive to get new customers, but won’t offer the same tech to loyal customers. As a result, even if the two types of customer end up paying the same price, the newer customer is still getting a better deal.

Despite this, our research has found that on average, consumers stay with their broadband provider for five years and nine months.

One of the biggest concerns in the mobile phone sector centres around the way in which providers calculate the monthly cost for fixed term contracts that cover the handset as well as the cost of usage.

The majority of monthly phone contracts in the UK include handset and usage. When calculating the monthly repayments, the provider calculates how much the phone is worth and splits this over the fixed term contract period and combines this with the cost of monthly usage allowance.

However, given that the contract rolls over when the fixed period is complete, many customers continue to pay the initial monthly price even though the headset has been paid off in full. In October 2017, Citizens Advice estimated that three out of the four largest phone providers (EE, Vodafone and Three) continue to charge customers too much for their phones once initial contracts had run out. They estimated these customers were paying, on average, £22 a month more than they should have been – and in some cases this spiked to £38.4

Consumers stay with home and contents insurance companies from almost three and a half years. In much the same way as car insurance, there’s a culture of auto renewal and benefitting from no claims discounts. These act as deterrents from shopping around as customers feel that it’s unlikely they’ll find a better offer.

50% of people who purchased home insurance through Confused.com payed £124.51 or less for buildings and contents cover. But those who shop around and use Confused.com could save up to £94 on their home insurance7.

The average insurance policy holder spends 3 years and 1 month with the same car insurer. Indeed, 55% of motorists who renewed their policy between January and March 2019 found their new price had increased on the previous year, with the average policy being £46 more expensive8.

According to Confused.com’s quarterly car insurance price index (the most comprehensive car insurance price index in the UK based on more than six million quotes a quarter), the average UK car insurance premium has hit £762. The average price of car insurance dropped

-£12 (-1%) over the past quarter (Q1 2019), suggesting those who are shopping around are benefitting from cheaper prices.

Research shows that one in seven (15%) of those surveyed said they generally let their utilities auto-renew for reasons such as avoiding the time and hassle of shopping around or just assuming that they are already getting the best deal.

More than half (55%) of motorists who renewed their car insurance in the last quarter (January- March 2019) saw their premium go up by £46 when they opened their renewal notice, on average.

There are a number of ways that long-standing insurance policyholders – particularly those with home, contents or car insurance – can be hit by the loyalty penalty. Most insurers renew policies on an auto-enrolment basis. Essentially this means that once the insurance policy runs out, the insurance company automatically signs the customer up to continue the policy for another year UNLESS the customer contacts them in the final month of the contract.

The auto-renewed policy comes with a cooling off period, and consumers who want to cancel their policy outside of this window may face additional financial penalties.

When auto-enrolling policy holders, insurance companies are able to increase prices. So a customer on the fifth year of their policy could be paying more than a new customer with a similar profile.

Of course, there are laws around what insurers can and can’t do when auto-renewing policies and they do have some duty of care to their customers. Legally they should not auto-renew your policy without giving you at least one month’s notice in writing that the policy is about to end. They must outline the previous year’s price as well as the policy price for the following year so that customers can see the difference in cost.

If the company fails to inform you of this in writing then you still might be able to cancel even once the new policy has started. However, if you fail to cancel within the set period then you may end up locked into another annual contract.

While auto-renewal might seem like a time-efficient and easy solution it rarely means the customer gets the best deal as the new contract is offered at a higher price.

There’s only one way to really make sure you aren’t hit by the loyalty penalty and that is to shop around and switch providers.

Our research found that the average customer managed to save £80 on their car insurance, £57 on their home insurance, £53 on broadband and a whopping £83 a year on their energy bills, simply by switching providers.

Yet despite this, only 22% of those surveyed claimed that they shopped around yearly to check they were on the best deals and 57% didn’t even shop around when their contracts were up for auto- renewal.

While many people are reluctant to shop around, as it’s seen as time consuming and confusing, the facts demonstrate that by doing so, customers can save a lot of money.

Here are our top tips for shopping around:

1. Look at different prices

It’s never been easier to find a better deal, thanks to comparison websites. For example, getting a car insurance quote at Confused.com will show you your best price from over 100 providers across the market.

While our research reveals 13% of people have never used a price comparison site, 39% who those who did, claimed they had a better deal and 60% claimed they were happy with the deal that they received.

2. Figure out what you need

Only you know your individual needs from a product. Some companies will offer toys, meals and freebies as incentives to sign up but always make sure that any services you buy meet your needs and, more importantly, you aren’t being forced to pay for things that you know you won’t use.

3. Keep track of your dates

Always keep track of the paperwork associated with your contracts, make sure that you know when they’re due to end, and when you’re able to cancel. Set reminders and put the dates in your diary!

For those who take out their insurance with Confused.com, we’ll send you quote reminders via email so that you can put your mind at ease that you won’t be renewed without checking the new price!

To alleviate the sting of the loyalty penalty, Confused.com guarantee that we can beat the renewal price of those who shop around for their car insurance, or you get the difference plus £20.

It’s also imperative that what you get in terms of coverage meets your requirements and offers you the same coverage as previous insurance deals. If you’re looking for a new policy, we’ll help ensure that you compare like-for-like products to avoid any confusion. This essentially means that, if you end up paying less, you can check that you won’t lose the perks of your previous policies.


1 Unless otherwise stated, all figures taken from omnibus research carried out by One Poll on behalf of Confused.com. This was an online poll of 2,000 UK motorists who are homeowners or renters (nationally representative sample). The research was conducted between 21st December 2018 and 3rd January 2019.

2 Figures taken from omnibus research carried out by One Poll on behalf of Confused.com. This was an online poll of 2,000 UK motorists who are homeowners or renters (nationally representative sample). The research was conducted between 21st March 2019 and 25th March 2019.

3 https://www.citizensadvice.org.uk/about-us/how-citizens-advice-works/media/press-releases/citizens-advice-issues-super-complaint-as-loyal-customers-continue-to-be-penalised-by-over-4-billion-a-year/

4 https://www.citizensadvice.org.uk/about-us/how-citizens-advice-works/media/press-releases/mobile-phone-networks-overcharging-loyal-customers-by-up-to-38-a-month/

5 https://www.bbc.co.uk/news/business-46042087

6 https://www.gov.uk/government/news/cma-tackles-loyalty-penalty-charges

7 Based on online independent research by Consumer Intelligence (January 19). 51% of home insurance customers could save £94.43 on a combined policy.

8 Confused.com & Willis Towers Watson Car Insurance Price Index Q1 2019