Elderly and vulnerable customers are being routinely overcharged by utility and insurance firms in a hidden scandal highlighted today by one of the country’s senior financial services executives. Unfair practices are putting them at risk of being unable to afford food and heating, he warns.
Michael Donald, a former director of Visa UK, said he was staggered to discover hundreds of pounds of overcharging when he carefully checked the direct debits on his 79-year-old mother’s accounts.
“There is a great deal of mis-selling of services to the elderly, who are often unable to effectively check online statements and direct debits,” he said. “Organisations should be reviewing the accounts of consumers of pensionable age. In the current crisis, they have a duty of care to ensure the products sold are fit for purpose.”
Donald was asked by his mother, Carole Grant, who lives near Chichester, to check her financial affairs after the death of her long-term partner. He discovered that she had been sold two white goods insurance policies on a £330 Indesit washing machine that came with the standard warranty. The total cost of the two policies was more than £500.
An initial policy was purchased from leading household product insurance firm Domestic & General in May 2018 for £5.49 a month, and another three-year policy sold by Repair & Assure for the same appliance in September 2020 for £225.
The Information Commissioner’s Office (ICO) and the consumer group Which? have previously raised concerns about the sale of insurance for white goods to elderly people who may be vulnerable and buying unsuitable policies.
Sam Richardson, deputy editor of Which? Money, said: “Which? has warned about firms cold-calling and charging vulnerable customers inflated fees for appliances cover for many years. We’ve received hundreds of reports from family members who discover elderly relatives are paying hundreds, or even thousands, of pounds a month for worthless cover.”
Donald’s analysis of his mother’s bills also found that Shell Energy, her broadband, energy and telephone provider, had stopped her £8-a-month telephone call plan, which meant she was being charged for every call. The changes resulted in an overpayment of £482 between November 2020 and August 2022.
Donald said it was vital that people helped elderly relatives who might be vulnerable to review their outgoings. He said he also discovered one of his mother’s old phones had a monthly charge of about £12 a month, which has now been cancelled.
“It’s a scandal that companies in the current crisis are selling products and packages to the elderly which are inappropriate. It may push the elderly into a position where they can’t afford to turn on their heating or buy food this winter,” Donald said.
Sir Steve Webb, the personal finance expert and former pensions minister, said: “Not everyone is in a position to watch their bank account and utility bills like a hawk, or to battle through automated switchboards when things look wrong. We need a fundamental duty of care, especially to vulnerable customers, with tough penalties when people get shoddy treatment”.
Shell Energy said Grant had been upgraded to a £20.99 superfast fibre package without any additional charges in November 2020, but her call plan had been mistakenly removed. They said this had resulted in an overpayment of £482.04. The firm said it had apologised and was refunding the money and offering free broadband and calls for the rest of the year as a gesture of goodwill.
Domestic & General said it had extensive safeguards to protect vulnerable customers and was satisfied the policy sold for Grant’s washing machine was offered and sold fairly. Repair & Assure did not provide details on how it marketed its policy, but said a claim had been made on it and it did not believe it was unnecessary.