Lifting the Lid on Sneaky Fees and Charges

26th July 2014

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.

We found:

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