'Ill informed' consumers count the costs

Too many consumers fail to look for mortgages and savings deals

Julian Knight BBC News Online personal finance reporter

UK consumers could save more than £700 a year each by shopping around for financial products such as current accounts, mortgages and credit cards according to the City watchdog.

We have to push and prod financial firms into producing clear costs for consumers ... in the past there has been too much mumbo jumbo

Howard Davies, FSA chairman

The research published by the Financial Services Authority (FSA) highlights that young and old consumers are the least likely to shop around.

The FSA is particularly concerned that those on low incomes and the elderly are losing out by accepting the first deal they come across.

Speaking to journalists, FSA chairman Howard Davies said most people found shopping around "quite time costly, boring and difficult".

Ill-informed public

Mr Davies said at present the public was not well informed and as a result paid over the odds.

Potential annual savings

Mortgage £230

Credit card £137

Savings account £117

Personal loan £116

Current account £26

Source: Financial Services Authority

Four out of 10 consumers - out of 60,000 UK adults surveyed - said they thought the price of financial products was similar across the marketplace.

"People tend to ignore the normal shopping disciplines when it comes to financial products and services. Many consumers wouldn't dream of only visiting one shop to buy a washing machine," Mr Davies said.

Consumers are letting money slip through their hands

The research revealed that in total, a typical young couple could save £711 by switching their current accounts, savings accounts, mortgages, credit cards and personal loans to the best available in the marketplace.

Just by swapping mortgage providers UK consumers could save £230 a year on average.

Low income groups miss out

Retired couples lose out to the tune of £340 a year.

This is less than the UK average, but the impact of not shopping around is often proportionately greater because their incomes tend to be lower.

Londoners seem to leave the most money on the table as far as financial product purchases are concerned.

Howard Davies FSA chairman

Likewise, younger adults on low incomes were identified by Mr Davies as having to pay the highest prices.

"Unfortunately, those who least can afford it tend to miss out the most. As a result, we have to push and prod financial firms into producing clear costs for consumers. In the past there has been too much mumbo jumbo," Mr Davies told BBC News Online.

Middle Britain winners

At the other end of the scale, older families, often with above average incomes and with a greater propensity to seek independent financial advice had their finances on a far more even keel.

The typical older family could save only £284 on average from switching their mortgage, current account and savings accounts.

Region-by region

People in Yorkshire and Scotland were found to be the most able at securing a good financial deal.

However, according to Mr Davies people in the South of England lost the most by not shopping around.

"Londoners seem to leave the most money on the table as far as financial product purchases are concerned," Mr Davies added.

To help consumers get the best deal, the FSA publishes comparative tables on its website on a range of financial products, as well as putting its consumer guide, 'It Pays To Shop Around', in most High Street post offices.