Not upheld: differential pricing / unfair treatment of existing customers complaint against Yorkshire Building Society

Decision detail

Summary

Mr and Mrs B complained to Yorkshire Building Society that the interest rate products available to them as existing customers had higher rates than those offered to new customers, claiming unfair treatment. YBS responded that new customer products include introductory benefits and that it offers competitive rates to existing members. The ombudsman found that differential pricing is permitted under the Consumer Duty provided fair value is demonstrated, and was satisfied that YBS had properly assessed fair value by considering product benefits, marketplace comparisons, and provision costs. The ombudsman rejected the argument that all products must be displayed on a single screen and found that Mr and Mrs B had the option to switch lenders if unsatisfied. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied FCA guidance on differential pricing which explicitly permits firms to charge different prices to different customer groups, provided the products offer fair value. Fair value is assessed by comparing the cost of a product to its benefits, not by comparing one product to another. The ombudsman was satisfied that YBS had properly considered fair value factors including product benefits (such as ease of switching without affordability assessment or legal fees), price relative to the marketplace, and costs of provision. The ombudsman rejected the argument that products must be displayed on a single screen, finding that showing ineligible products could cause confusion rather than aid consumer decision-making.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website