FINANCIAL INEQUALITY
If you are loyal, a woman or disabled, you could be paying more...it’s time to level the playing field
CONSUMERS are facing penalties for being disabled, female – or loyal to a particular company. Research by The Mail on Sunday shows how different groups of society are facing disproportionately higher costs for goods, utilities and financial products compared to their peers.
Whether it is double the cost for women’s perfume or hundreds of pounds more for the same insurance deal because a customer – male or female – has not switched, our findings show there is more work to be done to level the playing field. Our probe coincides with a consultation launched by the Government this month, highlighting how shopper competition ‘works well for some but not everyone’.
Here, we expose how some consumers are more equal than others – and explore ways to solve the problem.
THE DISABILITY PRICE TAG
THERE are 14 million disabled people living in the UK – paying an average £570 extra a month for everyday living expenses, according to a report by charity Scope.
One in five disabled people pay more than £1,000 extra each month.
After housing costs, half of their remaining income is spent on disability-related expenses. Often this comes from having to buy specially adapted equipment for which there is little or no market competition.
Higher costs also come from energy use, transport and insurance.
The charity has uncovered further examples of discriminatory charges including a spare battery for an electric wheelchair that costs £600; hand grips for wheelchairs and walkers that cost five times those for bikes; knives with angled- blades for £ 15 each; and a £4,000 charge for the creation of a disabled person’s parking bay near the home of someone in need.
Mark Atkinson, chief executive of Scope, says these additional outlays amount to a ‘disability price-tag’.
WHAT TO DO: Have your say. Contribute your thoughts to the Government’s consultation on ‘modernising consumer markets’ on behalf of yourself or the disabled community in general.
Visit Gov.uk to read the report and find out how to respond, or write to the Consumer Green Paper Team, Department for Business, Energy & Industrial Strategy ,1 st Floor, Orchard 3, 1 Victoria Street, London SW1H 0ET.
Georgie Frost, consumer expert for comparison website GoCompare says :‘ There is a wide range of disability- related financial support including benefits, tax credits, payments, grants and concessions.’
Visit Turn2us. org. uk, a charity matching people in need with available support. Or call Scope on 0808 800 3333 for more information.
Frost adds: ‘For help with heating, you could get £140 off your electricity bill through the Warm Home Discount Scheme.
‘You may also be able to get cold weather and winter fuel payments and up to £1,000 towards the replacement of your boiler. Contact your provider to find out if you are eligible.’
Tax relief is available for the purchase of certain items related to a disability. For help, contact the Customs and Excise VAT helpline on 0300 123 1073. There is also a discount available on Council Tax for households where a resident is‘ significantly and permanently’ disabled.
THE PINK TAX
GENDER bias in the price of goods and services hits both men and women at some stage in their lives.
But the ‘ pink tax’ – the higher prices women pay because of their gender – is rampant in the world of hygiene and personal grooming.
It is cruelly evident in the VAT charged on sanitary products that women have no choice but to buy, known as the ‘tampon tax’. The rate is 5 per cent and applies to maternity pads as well.
By comparison VAT is zero-rated for incontinence products used by both genders.
It does not take long to find examples of gender-based price discrimination in the beauty aisles, with a 69 per cent mark-up for basic twinblade disposable razors aimed at women compared to male equivalents. A second shop also marked them up by the same amount.
Meanwhile, a sample of barbers and hairdressers that neighbour each other in areas of Manchester, Birmingham and London showed women pay more than twice the price on average for a basic wet-cut – without any fancy blow dries.
Smelling good costs more for the fairer sex too with retailers selling
Obsessed by Calvin Klein at double the price per 100ml of the male version of the scent.
All is not fair in love either. Supermarket chain Sainsbury’s was admonished earlier this year for charging women in the Midlands 50p extra for a Valentine’s card for their husbands, compared to a virtually identical card aimed at men buying for their wives.
Beyond the high street, a gender imbalance pervades the financial industry.
A report by gender equality charity The Fawcett Society, together with law firm Pinsent Masons, shows women under-invest in their pensions, under-insure themselves relative to men and are more likely to experience poverty in retirement.
This picture is against a backdrop of the gender pay gap which sees most women earn significantly less than men over their working lives.
This gap continues through retirement, with research by consumer group Which? showing that women receive £29,000 less from the state pension than men over the course of a typical 20-year retirement.
WHAT TO DO: There is little women can do about costly toiletries other than develop an immunity to well-branded packaging – and turning to basic yet effective alternatives.
But in the world of financial services women should pay particular attention to their financial futures and get the advice they deserve to secure it.
Visit financial website SavvyWoman for tips and information about a range of subjects and guidance on finding a suitable financial adviser.
THE LOYALTY PENALTY
LONG-STANDING customers subsidise the discounts enjoyed by everyone else. The annual ‘loyalty penalty’ paid by those sticking with the same utility and financial providers each year is nearly £1,000 according to consumer charity Citizens Advice.
The Government’s consultation admits that energy, telecoms and financial firms charge ‘ increasingly higher prices’ to customers who have not switched recently.
It adds: ‘ The large gap between the best and the worst deals received by consumers is difficult to justify and it is often the vulnerable who suffer disproportionately .’
For example, the difference between the cheapest 12- month fixed-rate gas and electricity tariff and the average dual-fuel deal is £470 a year. Some two million homeowners pay £360 a month extra interest for staying on their mortgage lender’s standard variable rate rather than picking a new deal from another provider.
Half of consumers could save £280 a year by shopping around for car insurance while a quarter could save £113 on buildings and contents insurance.
The Financial Ombudsman Service, which settles disputes between customers and financial firms, has seen a ‘ small but significant’ number of complaints where insurance customers are being mistreated for loyalty. Chief executive Caroline Wayman says: ‘People are paying the price for loyalty in a way that is simply not fair.’
WHAT TO DO: Frost says the answer is to ‘ditch and switch’. She adds: ‘When it comes to gas and electricity, sometimes you will not even have to change your supplier to lower your bills. Just move to a cheaper tariff with your current energy company and do not be afraid to haggle. Those who have stayed with one insurer for a long time save the most by switching.’
To compare energy deals try comparison website TheEnergyShop. Websites GoCompare and MoneySuperMarket can help with insurance.
Use a mortgage broker such as London and Country or new online alternatives – including Habito and Trussle – to find a cheaper home loan.
THE OFFLINE TARIFF
MOST British consumers are digitally capable, but there are still millions who lack the confidence to buy goods and services online – or do not want to.
Providers are increasingly focusing on internet consumers, so those paying ‘the offline tariff’ lose out on significant discounts or higher interest for cash deposits.
In the world of energy for example, offline customers pay more to receive paper bills than those who agree to receive digital versions.
The best savings rates are reserved for those opening accounts online, meaning customers take a hit on interest earned if they bank in person, by post or over the phone.
For two, three and five-year fixedrate bonds, only one of the marketleaders allows customers to open an account in person. That is United Bank UK, which has only a handful of branches.
WHAT TO DO: If you cannot beat them join them. Allowing for paperless billing and online account management paves the way for lower bills and higher interest earned.
If you are not happy to do it yourself, rope in a friend or relative to help.
Alternatively, sign up with just one online company that promises to switch deals automatically on your behalf. Flipper or Switchcraft will do this in the energy market.
If the internet really is not an option, contact at least three providers each for energy, insurance or broadband, including your own, and ask for their best offers. In some cases your existing provider may relent to offer a better deal.
For savings, try building societies in your local area which usually have better rates than the banks, even if they are not best-buys.
Lesser-known brands with market leading rates often allow account openings by post or phone. Try Kent Reliance, Hodge Bank, Close Brothers Savings and PCF Bank.