This is a very interesting statement from the FCA.
It seems to have been sparked by the dual pricing of insurance products. New customers get a competitive price, but at renewal, the price for existing customers is much higher.
But presumably, it applies to mortgage rates as well.
It's even more important because of the difficulty and cost of switching mortgages.
If my insurance company quotes me £850 for renewal of my house insurance and I call them as a new customer and get quoted £200, I can either avail of that rate or switch to another insurer. It takes time to switch lender and not all people can do so.
And everyone understands absolute numbers. £850 is higher than £200. Most people can't compare mortgages. They don't understand percentages. They frequently think that a mortgage with lower repayments is cheaper, even if the interest rate is higher and the term is longer.
Should lenders be prevented from exploiting the inertia and lack of knowledge of customers?
Brendan