If you’ve ever experienced the surprise of an auto-renewed subscription, spare a moment for Ben Wright*. His family’s AA car breakdown cover was renewed for an astonishing £747. However, had he visited the AA website as a new customer, he would have paid only £170 for the same policy.
While many companies entice customers with discounted prices initially, only to dramatically increase them in subsequent years, the AA, owned by private equity, seems to excel at raising prices for loyal customers.
Wright, a customer for over 20 years, had paid £575 the previous year, making the new price a staggering 30% higher.
After expressing his dissatisfaction to the company, Wright was denied any refund, leaving him with the impression that the AA intentionally concealed the substantial price hike, hoping he wouldn’t notice.
As a self-employed construction consultant, he has “family” cover, which provides breakdown assistance for himself, his wife, and their daughter in any vehicle they drive. The package includes home start, relay, and onward travel services.
Wright only discovered the renewal when he spotted the £747 charge on his bank statement. It turned out that the renewal email had been misplaced in his junk mail folder.
He is not the first AA customer to raise this issue. In 2020, another reader complained about a 50% increase in their premium.
“I wasn’t even aware that I had signed up for auto-renewal, and I was too preoccupied with work to realize it had expired,” says Wright.
“When I raised my concerns, they suggested the inflated price reflected the discount I received last year, but I didn’t receive any discount at all.
“Since I was outside the 14-day cooling-off period, I am stuck with the inflated price. I feel extremely ripped off, and I definitely won’t be renewing next year.”
Wright’s frustration deepened when Money informed him about the £170 offer available to new customers on the AA website. This first-year discount rate is a 50% reduction from £340, and even the regular price is less than half of what Wright had paid.
His case exemplifies the “loyalty price premium” highlighted by Which?, where loyal customers who auto-renew end up paying significantly more than those who shop around.
In 2022, the Financial Conduct Authority banned insurers from charging existing policyholders inflated premiums to fund discounts for new customers, although this rule doesn’t apply to car breakdown companies.
The AA explains that Wright’s case was complicated by his increased coverage and previous callouts. They also mention additional cover, such as lost key insurance, not available to new customers.
“Our pricing reflects the level of service we offer. While you can find lower prices elsewhere, our members value exceptional service. For the past five years, we have been a recommended provider by Which?. Our renewal notice encourages members to contact us for policy discussions and clearly states they can explore other options,” the AA states.
Originally founded as the Automobile Association in 1905, the AA had £3 billion in debt when it went public in 2014. During the flotation, private equity firms CVC, Permira, and Charterhouse made £1.2 billion. However, the AA faced significant challenges and struggled with £2.6 billion in debts. In 2020, it returned to private ownership under two new private equity firms.
*Ben Wright is a pseudonym
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
