Are you being charged for being savvy about your buildings insurance?
The mid-nineties were dark days. Not just because of Peter Andre and East 17 but also because those were the shady times when building societies forced you to take out their own buildings insurance policies when you had a mortgage with them- at a healthily inflated premium of course.
But in the face of a sledgehammer of legislation to tackle the problem, the practice was dropped, and in today's more enlightened times, new buyers are free to shop around, using any one of the multiple comparison sites around to secure the best deal on home insurance.
However, there is still an issue for homeowners. Last month comparethemarket.com (the one with the rodents) calculated that, for the'significant number 'of people, who have not switched since taking out their home insurance under sufferance through their original lender, they could have saved 'legacy losses' totalling around £2.2bn – an average of £1,446 per household over the last 20 years.
Additionally, the cheeky anthropomorphic creatures discovered that some building societies, mostly smaller regional ones, are still levying a penalty charge of up to £45 if you choose not to take out their overpriced insurance.s
Sounds a bit rum. Of course, the building societies can't actually charge you for not buying their products, that would be madness. What they can do, however, is charge you an administration fee for requiring sight of your alternative insurance provider to ensure that it is, in fact, bona fide. Unlike the admin charge itself.
The comparethemarket.com research found Ipswich building society to be the worst offender in a list of 18 lenders which charge home buyers for daring to choose a cheaper insurance provider.Ipswich charges £45, but out of the other charging lenders, the largest is Skipton, which charges £25.
Simon McCulloch of comparethemarket.com said, based on the mortgage and remortgage market share of those lenders that impose a fee, consumers are collectively paying nearly £2m a year for these charges.
"These charges are essentially a tax on being financially proactive and prudent," he said. "Shopping around for buildings and contents insurance saves a third of UK households more than £100, which could, for example, pay for your first six months broadband after you move house. But charges like these are designed to put people off doing this and, in many instances, to tie them into more expensive products."
A spokesman for the Ipswich said: "The society has recently conducted a review of the 'own insurance' mortgage fee. The result of this is that we intend to remove this fee for all applications from 1 September 2014."
A Skipton spokesman said: "There is a charge we make to ensure that if someone buys their buildings insurance elsewhere, we need to check that the property is properly insured."
And yes, I know they are mammals.