Naivete and laziness among consumers is costing them dearly according to two recent studies in Britain. British banks earn £9.3 billion sterling annually (€15.77 billion) due to customer inertia according to a report released last week by Datamonitor. The level of customer unwillingness to seek out a more competitive deal is high in the retail banking sector due to sheer laziness on behalf of customers says the survey. This apathy translates into bank profits of £4.2 billion sterling in mortgage revenue, £3 billion sterling of savings account revenue and £2.1 billion of unsecured personal loan revenue.

Following the survey of 2,500 customers, it was determined that the main reasons customers had not changed their product provider were: it would be too much effort, they could not be bothered or for no particular reason.

The greatest level of inertia was registered in the mortgage market with 42.1 per cent of those surveyed saying they didn't change for one of the above reasons. Meanwhile, 42 per cent of deposit account customers and 40.3 per cent of unsecured personal loan customers had not been able to muster the energy to look around and change their product provider.

A Financial Services Authority (FSA) report found that consumers often do not understand the information they receive, are uncertain how products fit their needs and fail to shop around. Most consumers were likely to look at products from companies of which they were already customers rather than seek independent advice.

One solution proposed by the FSA was the teaching of financial matters in schools. This is similar to the Investment 101-type courses already offered to students in the United States.

Industry experts say there are parallels here with the situation in Britain. The recent wrangle between the insurance industry and consumer groups over the amount of information provided to investors at the point of sale reflects concern that Irish consumers are already overwhelmed.