Beware the 'personal pricing' smokescreen

A NUMBER of personal loan providers have increased their rates in the three months since the last rise in the bank base rate in July, according to uSwitch.

The comparison website found 32 providers made increases, with branch and telephone rates rising five times more, on average, than online rates.

As well as comparing both online and offline rates, consumers need to approach providers that operate "personal pricing" with caution. This is where the lender gives consumers their own rate, which is the perfect smokescreen to operate a less than transparent pricing policy.

uSwitch's research has found seven banks have now adopted a personal pricing policy on loans.

Customers going into a branch cannot expect to see "typical" APRs advertised, which prevents them from making a fair comparison and, more worryingly, makes this area difficult to regulate.

Mike Naylor, personal finance expert at uSwitch, said: "There are already huge variations in the loan rates available to consumers among both online and offline deals.

"Throwing the personal pricing smoke screen in is just causing further confusion, making it a complete minefield for consumers to shop around and get the best deal.

It is far from transparent and a perfect way for the big banks to prey on loyal customers that trust their existing bank to provide them with a competitive deal. In effect, there is absolutely no way of the industry knowing which rates customers are getting from each provider, which could harm competition."

Seven providers - Abbey National, Bank of Scotland, Barclays, Clydesdale Bank, Halifax, HSBC and Yorkshire Bank - have turned to offering personal pricing in-branch in the past 18 months.

Royal Bank of Scotland and NatWest are the only high street banks not to have yet resorted to personal pricing.