Tying

Tying occurs when two or more products are sold together in a package and at least one of these products is not sold separately. It is different from bundling that occurs where two or more products are sold together in a package, although each product is also available separately.

Product tying in retail financial services may reduce the credit risk faced by financial services providers (by enabling them to monitor the customer’s finances more efficiently) and create economies of scope, which in turn may benefit consumers by enabling them to purchase two products together more cheaply than could be done if they were provided separately. At the same time, however, tying might force consumers to purchase additional or perhaps unnecessary products. It may also have a negative impact on price transparency and comparability among providers.

Not only product tying, but also similar commercial practices, such as those through which consumers are obliged to have their salary paid into the current account with their mortgage provider, may restrict customer mobility and limit competition. Such commercial practices may potentially be considered as unfair as they may directly distort consumers’ economic behaviour by, for instance, leading them to purchase products that they do not need or do not meet their needs.

Consultation on the study on tying

Study on tying and other potentially unfair commercial practices in the financial sector