Mortgage switchers herald new era of consumer power

The number of customers shopping around for mortgages is rising, although the oldest and poorest customers are least likely to switch, the consumer watchdog said today.

There is a general upturn in the number of people changing their service providers, the National Consumer Council (NCC) said. It found a 52% overall rise in customers swapping services since 2000.

Mortgages are the fastest rising area of consumer switching, the group found, as the number of people changing their mortgage provider has risen by 158% since 2000. However the old adage that you are more likely to divorce than switch bank accounts seems to hold true, with a modest 17% rise in the number of customers moving banks over the same period. Just 7% of customers swapped company this year.

The NCC's active consumer index was based on research carried out among gas, electricity, fixed telephone, current account, mortgage and home insurance customers.

"We are witnessing a dramatic rise in consumer power," said Ed Mayo, the NCC's chief executive. "Customers are increasingly turning their backs on companies whose services do not come up to scratch and changing suppliers to get what they need."

He added: "Our findings are a strong warning to those companies who ignore their customers' needs: wave goodbye to your customers. You have to earn customer loyalty, rather than assume it."

But the NCC warned that the growth in "consumer power" did not affect all service users. The richest and youngest customers are twice as likely to switch their home insurance provider as the oldest and least well-off, the group said.

"Beneath the positive headline trend of smooth changeovers and happy customers, problems still lurk - especially for the oldest and poorest," an NCC spokeswoman said.

The group is calling on the regulator for each of the six markets to promote the benefits of switching and remove barriers to competition. It is warning customers to beware of "lock-in" practices which persuade them to stay with an uncompetitive provider. These include early exit charges and planned incompatibilities in new equipment.