This week our resident grump, Rick Wakeman is leading the charge against admin fees. Why do big companies often make us pay exorbitant costs for them to process our paperwork?
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Admin fees crop up in all sorts of businesses, even the ones that are supposed to be showing us a good time. Big ticket agencies have always liked their booking fees, but it seems it's now gone way beyond a nominal charge to cover costs. Take Ticketmaster's fees for the Queen musical, "We Will Rock You". If you booked online through Ticketmaster and chose the £62 ticket, you would have to pay £8.25 on top of that in fees. That's bad enough. But what's confusing is why the company varies the fee according to the price of ticket you're buying. Surely it doesn't cost them more to process expensive tickets, so why do they charge more? The costs don't stop there. Ticketmaster charges customers £4 per order to pick up their tickets from the box office, have the tickets posted to them, or even have the link emailed to them so they can print out the tickets themselves.
When it comes to sky-high fees, airline companies are no exception. Take two of the UK's main carriers: Virgin Atlantic and British Airways. If you want to change the date of travel on their lowest fare tickets, you'll have to pay. Virgin charge up to £120 for the alteration. British Airways charges a more modest £30 to make the change over the phone (it is free online), but then adds a £100 penalty fee on top, bringing the total to £130.
Pick another form of transport, such as cars, and you still can't escape the costs. Car insurance policies often charge admin fees when customers make changes to their policies.
Joe Townsend insures his car with Halifax. When he moved house, Halifax not only increased his premium because he was moving to a higher risk neighbourhood, they also charged him £25 for producing new documents.
But that's not the most expensive admin fee out there. When Karen Devitt informed the company she had bought her car cover with, One Call Insurance, that she was moving house, she was made to pay a whopping £55 for them to update her address. She told us that she was very surprised that a change of address was counted as an amendment to her policy. She told us when she first read her policy's small print, she assumed the amendments would only cover details such as a change of vehicle, or a switch from third party to comprehensive cover.
So why do some insurance companies charge such high amounts? The regulations state that insurance companies must treat their customers fairly, so it is up to the insurance companies to set what might be considered a fair admin fee. Admin fees vary across the board and some companies don't charge any fees for mid-term adjustments.
That is why Simon Read, personal finance editor at The Independent, thinks it is critical to check policies closely before buying: "When you buy a policy, you need to look at the total cost. That means not just looking at the monthly or annual premium, but looking at all the other fees. That means going through the small print, finding out what other charges they're going to lump on you later on."
At least processing this kind of paperwork might save you some money!
A Ticketmaster spokesperson said:
With free food and drinks, free baggage and free check-in, we offer our customers the best possible value for money.
We also offer a full range of fare structures that allow our customers the option of choosing a ticket that suits their individual requirements.
For customers who think they may want the option to change their date of travel, but are not sure and do not want to purchase the higher fully-flexible fare, we offer a ticket that allows a one-off payment which is only made if the customer chooses to fly on a different day.
We understand that customers can make unintentional typing errors when booking their travel arrangements, for this reason we do not charge a fee for corrections.
We do not charge for bookings by debit card, do not charge for check-in and allow customers to make changes to the date of travel for free on our website, ba.com.
A Virgin Atlantic spokesperson said:
"Like most airlines and transport providers, we clearly offer flexible fares that allow changes or restricted fares that are lower priced but limit adjustments. This is not a hidden charge or administration fee - it is giving our customers the choice of fares depending on whether they are likely or not to change their travel plans. As this is clearly communicated before customers' purchase, the issue you have raised is very rare. However we are very sorry if the three customers that you have referenced in your programme feel that they have been disadvantaged."
A One Call Insurance spokesperson said:
"All of our charges are brought to the customer's attention at the point of sale, and again if the customer is discussing any changes. They are outlined in writing in our Terms of Business which the customer signs. This transparency allows customers to make an informed decision at the outset based on their likelihood of making any alterations during the year. We aim to deliver very competitive premiums and are transparent with our charges, which we make as simple and clear as possible to customers."
A Halifax spokesperson said:
"Mr Townsend's fees reflect the costs of updating the insurer which underwrites his policy, recalculating the premium as a result of his house move and re-issuing updated policy documentation. The fees are in line with industry standards and stated clearly in our terms and conditions."
An ABI spokesperson said:
"An insurer, in common with any other business, may incur extra costs when asked by their customer to make changes to their contract. While an insurer will try to absorb any extra costs where they can it may be necessary to make a charge to the customer concerned. Any charge made by an insurer should reflect the actual extra costs involved, and should be explained to the customer".
Rick's Rants: Admin Fees
In order to see this content you need to have both Javascript enabled and Flash installed. Visit BBC Webwise for full instructions. If you're reading via RSS, you'll need to visit the blog to access this content.
Admin fees crop up in all sorts of businesses, even the ones that are supposed to be showing us a good time. Big ticket agencies have always liked their booking fees, but it seems it's now gone way beyond a nominal charge to cover costs. Take Ticketmaster's fees for the Queen musical, "We Will Rock You". If you booked online through Ticketmaster and chose the £62 ticket, you would have to pay £8.25 on top of that in fees. That's bad enough. But what's confusing is why the company varies the fee according to the price of ticket you're buying. Surely it doesn't cost them more to process expensive tickets, so why do they charge more? The costs don't stop there. Ticketmaster charges customers £4 per order to pick up their tickets from the box office, have the tickets posted to them, or even have the link emailed to them so they can print out the tickets themselves.
When it comes to sky-high fees, airline companies are no exception. Take two of the UK's main carriers: Virgin Atlantic and British Airways. If you want to change the date of travel on their lowest fare tickets, you'll have to pay. Virgin charge up to £120 for the alteration. British Airways charges a more modest £30 to make the change over the phone (it is free online), but then adds a £100 penalty fee on top, bringing the total to £130.
Pick another form of transport, such as cars, and you still can't escape the costs. Car insurance policies often charge admin fees when customers make changes to their policies.
Joe Townsend insures his car with Halifax. When he moved house, Halifax not only increased his premium because he was moving to a higher risk neighbourhood, they also charged him £25 for producing new documents.
But that's not the most expensive admin fee out there. When Karen Devitt informed the company she had bought her car cover with, One Call Insurance, that she was moving house, she was made to pay a whopping £55 for them to update her address. She told us that she was very surprised that a change of address was counted as an amendment to her policy. She told us when she first read her policy's small print, she assumed the amendments would only cover details such as a change of vehicle, or a switch from third party to comprehensive cover.
So why do some insurance companies charge such high amounts? The regulations state that insurance companies must treat their customers fairly, so it is up to the insurance companies to set what might be considered a fair admin fee. Admin fees vary across the board and some companies don't charge any fees for mid-term adjustments.
That is why Simon Read, personal finance editor at The Independent, thinks it is critical to check policies closely before buying: "When you buy a policy, you need to look at the total cost. That means not just looking at the monthly or annual premium, but looking at all the other fees. That means going through the small print, finding out what other charges they're going to lump on you later on."
At least processing this kind of paperwork might save you some money!
COMPANY RESPONSES
A Ticketmaster spokesperson said:
- Ticketmaster does not independently decide the per ticket service charges and per booking order processing fees. All fees are agreed in consultation with each client and reflect the nature of the commercial agreement with the venue or event organiser and the level of retail, marketing and technology support being delivered to them by Ticketmaster.
- There is still a fundamental lack of understanding about why ticket agencies like Ticketmaster charge a per ticket service charge. In many instances, these fees are the sole source of revenue for ticket agencies. However, these fees do not just relate to the cost of processing the customer's individual booking and the distribution of the tickets purchased. These fees often cover the cost of Ticketmaster providing a wider range of services to our clients, including investment in venue access control, ticket fulfilment (printing, packing and distribution) and 24/7 customer services.
- Ticketmaster does acknowledge that excessively high per ticket fees can be a disincentive to customers to buy tickets. Therefore we endeavour to agree commercial terms with our client that allows us to be competitive. Ticketmaster is rarely the exclusive ticket seller for an event and therefore whenever possible, we try to agree terms with the event owner to allow us to be competitive with other ticket agencies.
- The booking fees for We Will Rock You are only one example and are the exception, rather than reflecting the level of fees charged by Ticketmaster for West End shows. For most UK events Ticketmaster sells for, the level of fees average at around 9% of the face value, with music concerts being slightly higher at just over 11%.
- All fees are clearly outlined throughout the Ticketmaster website, including before customers reach the purchase process, and broken down every time the customer sees the price. We listened to our customers and have increased the level of transparency relating to fees across the whole website. The reason fees are not included in the advertised price is because these vary across different ticket agencies and points of purchase, such as venue box offices. As a founding member of STAR, Ticketmaster also refunds all per ticket service charges if an event is cancelled. This is not standard practice for all ticket agencies.
- Ticketmaster does not currently have a separate level of order processing fee depending on how the customer receives their tickets. Customers currently pay the same amount for using our TicketFast (print-at-home) tickets, as they would to have their tickets posted to them. The Ticketmaster print at home option can only be offered once a high level of technology infrastructure has been installed at the event venue and the right level access control systems are in place. The venues do not normally pay Ticketmaster separately for supplying this technology and therefore this substantial cost is covered by the per ticket service charge and per booking order processing fees.
- Looking ahead, Ticketmaster is keen to encourage more customers to print their own tickets or have them sent to their mobile phones, so we do anticipate that pricing will become more flexible.
With free food and drinks, free baggage and free check-in, we offer our customers the best possible value for money.
We also offer a full range of fare structures that allow our customers the option of choosing a ticket that suits their individual requirements.
For customers who think they may want the option to change their date of travel, but are not sure and do not want to purchase the higher fully-flexible fare, we offer a ticket that allows a one-off payment which is only made if the customer chooses to fly on a different day.
We understand that customers can make unintentional typing errors when booking their travel arrangements, for this reason we do not charge a fee for corrections.
We do not charge for bookings by debit card, do not charge for check-in and allow customers to make changes to the date of travel for free on our website, ba.com.
A Virgin Atlantic spokesperson said:
"Like most airlines and transport providers, we clearly offer flexible fares that allow changes or restricted fares that are lower priced but limit adjustments. This is not a hidden charge or administration fee - it is giving our customers the choice of fares depending on whether they are likely or not to change their travel plans. As this is clearly communicated before customers' purchase, the issue you have raised is very rare. However we are very sorry if the three customers that you have referenced in your programme feel that they have been disadvantaged."
A One Call Insurance spokesperson said:
"All of our charges are brought to the customer's attention at the point of sale, and again if the customer is discussing any changes. They are outlined in writing in our Terms of Business which the customer signs. This transparency allows customers to make an informed decision at the outset based on their likelihood of making any alterations during the year. We aim to deliver very competitive premiums and are transparent with our charges, which we make as simple and clear as possible to customers."
A Halifax spokesperson said:
"Mr Townsend's fees reflect the costs of updating the insurer which underwrites his policy, recalculating the premium as a result of his house move and re-issuing updated policy documentation. The fees are in line with industry standards and stated clearly in our terms and conditions."
An ABI spokesperson said:
"An insurer, in common with any other business, may incur extra costs when asked by their customer to make changes to their contract. While an insurer will try to absorb any extra costs where they can it may be necessary to make a charge to the customer concerned. Any charge made by an insurer should reflect the actual extra costs involved, and should be explained to the customer".
Rick's Rants: Admin Fees