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EQ weekly roundup

This week’s roundup includes news that insurance customers are facing average loyalty penalties of £75, payday lender Wonga is near collapse and the recent heatwave means food prices are set for a 5% rise.

Loyal customers pay ‘£75 extra’ for insurance

Home insurance customers who stick with the same provider can find themselves paying £75 extra per year, research by Which? has found.

The consumer group said those who had held a combined buildings and contents policy for more than a year paid on average £270 annually. However, it said new customers were paying just £195 for the same policy.

According to Which? the loyalty penalty was found to grow over time. The group said customers who had been with the same insurer for more than 20 years paid around double the amount of what new customers paid.

For combined insurance, the average premium paid for a policy 20 or more years old was £396 per year, compared with the £195 new customers paid.

Which? said that to beat the higher prices, some had decided to cancel an existing policy, then re-purchase it with a new customer discount. Surprisingly, many insurers allowed policyholders to do this, it added.

Harry Rose, Which? money editor, said: ‘It is unacceptable that longstanding policyholders are taken for granted by insurance providers and hit by these excessive premiums.

’Customers who prefer to stay with one provider are at risk of being exploited by these vastly overpriced premiums when little has changed in the service they receive.’

Payday lender Wonga on brink of collapse

Payday lender Wonga has said it is considering ‘all options’ after reports suggested it was on the brink of collapse.

It follows a surge in compensation claims against the firm, amid a government clampdown on payday lenders.

According to reports, the firm has lined up Grant Thornton to act as administrators in the event it becomes insolvent with the ailing firm expected to make a decision about its future within weeks.

Britain's biggest payday lender, Wonga, faced criticism for its high cost, short term loans, which some said targeted the vulnerable.

In 2014 the Financial Conduct Authority found its debt collection practices were unfair and ordered it to pay £2.6m to compensate 45,000 customers.

Since then, payday loan companies have faced tougher rules and have their charges capped. This has hit Wonga's profits hard and in 2016 it posted pre-tax losses of nearly £65m, despite claiming its business had been ’transformed’.

A Wonga spokesman said: ’The number of complaints related to UK loans taken out before the current management team joined in 2014 has accelerated further, driven by claims management company activity.

’Against this claims backdrop, the Wonga board continues to assess all options regarding the future of the group and all of its entities.’

Food prices to rise 5% after warm weather

Meat, vegetable and dairy prices are set to rise ‘at least’ 5% in the coming months because of the UK's extreme weather this year, research suggests.

The Centre for Economics and Business Research (CEBR) said 2018's big freeze and heatwave would end up costing consumers about £7 extra per month.

It follows price warnings from farmers' representatives about peas, lettuces and potatoes.

Wholesale prices of other vegetables have already soared by up to 80% since the start of the year.

The research explained that these increases can take up to 18 months to fully effect shoppers.

’So, while the worst of the recent heat may have passed, the cost to consumers looks set to climb,’ it warned.

The UK saw record temperatures in June, July and August which caused widespread drought and crop failures. This, along with a ‘wet, cold and challenging’ winter, particularly the cold spell caused by the Beast from the East, has put stress on farming costs and yields, CEBR said.

Toyota to invest $500m in Uber

Japanese carmaker Toyota is to invest $500m (£387m) in Uber and expand a partnership to jointly develop self-driving cars.

The firm said this would involve the ‘mass-production’ of autonomous vehicles that would be deployed on Uber's ride sharing network.

It is being viewed as a way for both firms to catch up with rivals in the competitive driverless car market.

The deal also values Uber at some $72bn, despite its mounting losses. This is up 15% since its last investment in May but matches a previous valuation in February.

According to a press release issued by the firms, self-driving technology from each company will be integrated into purpose-built Toyota vehicles.

The fleet will be based on Toyota's Sienna Minivan model with pilot trials beginning in 2021.