Martin Lewis shared some consumer tips on his BBC podcast (Image: ITV)
Martin Lewis has warned people they could be hugely overpaying for household bills and subscriptions. In a recent episode of his BBC podcast, the financial expert asked people to write in with their experiences of being “financially burned” by a service provider. Many people shared their horror stories of being hugely overcharged often despite being loyal customers.
His co-host Adrian Chiles had a tale to tell about how he was previously paying £550 a year for breakdown cover with a well-known provider. He then found out that if he signed up as a new customer, it would be between £100 and £150.
Mr Lewis, founder of MoneySavingExpert, said that breakdown cover is one of the “most haggle-able” sectors and urged people not to renew their policy without trying to bring the price down. He added a warning that providers will often ratchet up your bill over time.
The expert said: “You were paying massively over the odds through what is called ‘price-walking’, where they walk your price up each year, so that eventually you’re paying so much more as an existing customer.” The consumer advocate said that in the insurance market, there are restrictions to prevent this practice, but there are no such rules for breakdown cover.
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Mr Lewis did raise concerns that quietly increasing a person’s bill could be especially cruel for more vulnerable customers. He said: “You are a victim to a competitive market. But my concern is if this is you in 40 years’ time, when you don’t have quite the same faculties that you do now, and you’re struggling, then I think that is taking advantage of people.”
A listener wrote in with a story about how their ‘very unsavvy’ pensioner mum had car insurance that auto-renewed for around seven years in a row. She ended up paying over £1,100 for the service.
When the listener found out about this, they did a comparison site search and found she could have had the insurance for £197, meaning she was overpaying by just over £900. Reflecting on the story, Mr Lewis said: “This is where it becomes a real problem, and that is market abuse.”
In a similar story, a person helped their pensioner family members switch their mobile provider. She found out they were paying almost £60 a month for their two SIMs. She switched them to a hugely cheaper deal paying just £8 a month.
Another fan of the show said they took out a 30-year life insurance policy about 25 years ago when they got married. They recently checked a comparison site and found they could get better cover for about a quarter of the price.
The person said not checking over the years must have cost them thousands of pounds. Mr Lewis explained: “A huge chunk of life insurance policy costs, especially term insurance, is commission. A huge amount of it. It can be tens of thousands of pounds if it’s quite an expensive policy.”
Another listener said they needed to have their boiler replaced a some years ago, and opted for the company that serviced their system. The company sub-contracted to a local person, who would have been £1,500 cheaper had the person gone with him directly.
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